## 1. IMPROVING THE MANAGEMENT OF NATURAL RESOURCES ## Source details **Canonical URL:** [1. IMPROVING THE MANAGEMENT OF NATURAL RESOURCES](https://www.imf.org/-/media/files/capacity-developement/mnrw/mnrw-program-janaury-2017.pdf) ## Other formats - [Markdown version](/-/media/files/capacity-developement/mnrw/mnrw-program-janaury-2017.pdf.md) - [Structured JSON version](/-/media/files/capacity-developement/mnrw/mnrw-program-janaury-2017.pdf.json) --- ### Background - The Managing Natural Resource Wealth Trust Fund (MNRW-TF) was established in 2011 by the International Monetary Fund (IMF) to help countries manage natural resource wealth. - The MNRW-TF leverages the IMF’s expertise to integrate policy, administrative and legislative dimensions and to advance fiscal transparency. - The trust fund was designed to address failures by many resource-rich developing countries to realize the full development potential of natural resources, particularly where extractive industries (EI) are significant. - Recent developments increasing TA needs: - The Addis Tax Initiative highlighted the critical need for revenue mobilization (RM) to finance the Post-2015 Development Agenda, especially for low-income countries (LICs). - The fall in commodity prices has worsened fiscal positions and increased pressure to reform natural resource and non-natural resource revenue systems. - Commodity price volatility has increased the need to address exchange rate and macroprudential policies to smooth macroeconomic and financial impacts. - Growing focus on climate change and potential reduced demand for fossil fuels increases TA needs, including in countries facing significant depletion of natural resources. - Phase 1 was extended to expire in April 2017 (originally May 2011–April 2016). The amount contributed to Phase 1 is US$24.7 million. - Phase 2 (“MNRW2”) is proposed to continue and expand TA support. ### MNRW-TF Phase 1 Achievements — Overview - Phase 1 demonstrated success in assisting resource-rich countries in implementing reforms and building capacity in managing natural resources. - A Results Based Management (RBM) methodology was used to measure and monitor reform implementation and inform Steering Committee (SC) decisions. - The midterm evaluation (covering commencement to April 2014) rated projects very good on relevance and good on other OECD-DAC criteria; recommendations were incorporated into Phase 2 design. ### Key Achievements Supported by the MNRW-TF — Results to February 2016 (Box 1) - Since commencement in May 2011 the Steering Committee approved 43 projects in 22 countries, 8 research projects and 5 conferences/workshops. - Nine countries have reformed (either enacted or introduced to the governing authority) laws relating to EI fiscal regimes based on IMF advice. - Capacity to use the Fiscal Analysis for Resource Industries (FARI) model increased in 12 countries; training workshops averaged 20 participants per workshop. - Five countries formed special units within the revenue administration to administer large EI companies. - New or revised frameworks for public financial management are being implemented in 11 countries to better manage natural resource revenues. - One country reformed the governance structure and investment management of its Sovereign Wealth Fund (SWF). - Three countries improved their reporting of natural resource revenues in national accounts. - Four regional conferences on EI fiscal issues were held (East Africa, Asia-Pacific, Andean region (two)); attendance 60–90 participants each. - A Washington, DC conference produced papers used as the basis for a book on International Tax Issues for the Extractives Industries to be released in 2016. - Two handbooks released: Administering Fiscal Regimes for Extractive Industries: A Handbook (translated into French and Spanish) and Sovereign Asset-Liability Management Guidance for Resource-rich Countries. - A new template for collecting government revenue data from natural resources was developed and field-tested; the Extractive Industries Transparency Initiative (EITI) agreed to collaborate with the IMF in using the template. - A public version of the FARI model was developed and released with an accompanying Technical Note and Manual. - A draft guide on specific compilation issues for natural resources in macroeconomic statistics was completed for online comment. ### Recommendations of the Midterm Evaluation (Box 2) - Strengthen project design, planning and TA delivery through scoping missions; more focused and realistic objectives, outcomes and time frames; defining milestones and road maps; more in-depth risk analysis; delivering more hands-on TA; and aiming at continuity of engagement and capacity development. - Increase participation of IMF Regional Technical Assistance Centers (RTACs) and regional advisors. - Improve synergies and coordination among Fiscal Affairs Department (FAD) modules and with the IMF’s Legal Department. - Consider providing TA support on monetary and capital markets and statistics under non-TF IMF TA. - Enhance use of research projects and workshops to achieve TF objectives. - Enhance RBM as a monitoring tool by disaggregating outcomes and objectives in the log frame and using one set of scores for the bottom-up approach. - Clarify process for dealing with inactive projects. - Enhance efficiency of reporting to the SC. - Improve project budgeting to reduce over costing. - Appoint a full-time supra-manager in FAD financed by the TF to enhance standardization of the RBM system and distill lessons across projects. - The Steering Committee considered these recommendations and reflected them in the Phase 2 design. ### Geographic Coverage and Project Distribution - Approved budget distribution by region: 64% Africa, 29% Asia-Pacific, 6% Latin America and Caribbean, 2% Middle East. - Total eligible countries: 50; Number of Project Countries: 22. - Regional breakdown (Total Project Countries by Region): - Africa: Number of Eligible Countries 24; Percentage of Eligible Countries 48; Number of Project Countries 13; Percentage of Project Countries 59. - Asia-Pacific: Number of Eligible Countries 11; Percentage of Eligible Countries 22; Number of Project Countries 5; Percentage of Project Countries 23. - Europe: Number of Eligible Countries 1; Percentage of Eligible Countries 2; Number of Project Countries 0; Percentage of Project Countries 0. - Middle East and Central Asia: Number of Eligible Countries 9; Percentage of Eligible Countries 18; Number of Project Countries 2; Percentage of Project Countries 9. - Latin America and Caribbean: Number of Eligible Countries 5; Percentage of Eligible Countries 10; Number of Project Countries 2; Percentage of Project Countries 9. - Total: Number of Eligible Countries 50; Percentage of Eligible Countries 100; Number of Project Countries 22; Percentage of Project Countries 100. - Most Phase 1 projects focused on EI fiscal regimes and revenue management (Module 1), with later projects addressing modules on collection and management (Modules 2 and 3). - Fewer projects than envisaged addressed asset and liability management and statistics (Modules 4 and 5), partly due to limited demand. ### Phase 2 Priorities and Funding (Overview) - Phase 2 (“MNRW2”) will build on Phase 1 success with key features: - Targeted and intensive TA engagement with three broad changes: 1. Expanded scope to emphasize international tax policy and administration (BEPS concerns) and provide TA on energy subsidy reform. 2. More flexible delivery modes, including assigning experts to remain in-country for extended periods and use of in-country or regional long-term advisors. 3. Strengthened project design and planning with greater upfront engagement from country authorities via scoping missions and memorandums of partnership. - Consolidation of the Fiscal Analysis for Resource Industries (FARI) model as a TA-enhancing tool. - Continued analytical work with stronger focus on dissemination and learning through on-line and face-to-face training and horizontal learning (conferences, workshops). - A refined modular design retaining modules on: EI fiscal regime design; EI revenue administration; EI macro-fiscal policies and public financial management; and statistics for natural resources—replacing the asset and liability management module with a module on exchange rate regimes and macro-prudential policies in resource-rich countries. - Primary focus on low- and lower-middle-income resource-rich countries, with possible Steering Committee expansion to some upper-middle-income countries or a region where appropriate. - Funding requirement for Phase 2: - The trust fund will require funding of around $30 million covering the six-year period from mid-2016 to mid-2022 to enable deeper TA engagement, some expansion of country coverage, and addressing emerging issues. --- ### 2. MNRW-TF Phase 2 Proposal ### Objectives and scope - Phase 2 of the TF will continue to focus on supporting the proper management of natural resource wealth among developing countries. - The objective for MNRW2 is to build economic policy and administrative capacities to enable LICs and lower-middle-income countries (LMICs) to derive the maximum benefit from their oil, gas, and mineral resources, so as to facilitate their economic development and poverty reduction goals. - The log frame for MNRW2 (as distinct from project-level log frames) aims at reporting results at a strategic level, complementing and aggregating project-specific RBM indicators. ### Anticipated broader benefits - Improved development prospects of beneficiary countries are expected to provide a useful demonstration to their peers. - Better management of natural resources is expected to have important benefits for global commodity markets. - The TF’s analytical and policy lessons are expected to represent a global good and help strengthen the effectiveness of both development partners and the IMF. - These expected benefits build on the achievements under Phase 1 of the TF and the broader objectives of the trust fund. ### Monitoring, results framework, and accountability - The Phase 2 strategic log frame is documented in Appendix 2. - The log frame builds on the application of this approach in Phase 1 and is fully consistent with the IMF’s enhanced RBM framework. - The system involves: - the definition of a standardized catalog of TA project ‘objectives’ and ‘outcomes’; - the requirement to define project milestones; - establishing a framework for periodic scoring of, and reporting against, objectives, outcomes, and milestones. - The log frame’s design reflects the programmatic structure of the TF to provide full accountability for each module. ### Illustrative module activity - Time series indicators presented for MNRW-TF Modules across years: 2013, 2014, 2015, 2016. - Vertical scale indicators shown: 0 2 4 6 8 10 12 14. - Module identifiers shown: 1 2 3 4 5. --- ### Expected Benefits of the MNRW2 (Box 3) ### Expected benefits for resource-rich countries - Maximization of revenues over the life-cycle of extractive projects through balanced fiscal regimes and effective administration. - More effective spending of resource revenues to assist countries in meeting sustainable development goals, using budgetary mechanisms tailored to large, volatile, and finite resource revenues. - Better governance through enhanced accountability and transparency in public service handling resource revenues. - More investment in the natural resource sector from an attractive, stable investment climate that induces socially responsible behavior by companies. - Smoother impact on the economy of large and unpredictable swings in commodity prices to support stable economic growth and financial sector stability. - Creation of an information base on the economic impact of natural resources exploitation to inform strategic policy decisions. ### Expected benefits for the global community - Foster economic and social development in LICs and LMICs by using aid money to leverage the development impact of natural resource revenues. - An enlarged and more secure global supply of energy and minerals. - Improved climate for investment and production consistent with corporate social responsibility standards and home countries’ development policies. ### Expected benefits for partners - A mechanism for coordinating partner assistance in the area of natural resource wealth management and RM. - Opportunity to participate in discussion of IMF-led analytical and diagnostic tools sponsored by the TF. - Enhanced visibility and greater impact on the ground from leveraging a multi-donor trust fund. ### Expected benefits for the IMF - Improved coordination and knowledge exchange with other TA providers. - IMF’s TA delivery will benefit from the programmatic approach used in the TF and the governance structure emphasizing results orientation and accountability. ### Monitoring, reporting, and evaluation arrangements - Monitoring and evaluation of the MNRW2 will be continuous and overseen by the SC. - An independent midterm evaluation is scheduled in FY2020. - Project-specific RBM progress reports will be included in both the annual and midyear reports. - Strategic log frame results will be included in the annual reports only. - Further refinements to the log frame will be done in consultation with the SC. --- ### Key Elements of Memorandum of Partnership (Box 4) ### Overview and Project Description - The Memorandum of Partnership (MOP) is a formal agreement of cooperation between the IMF and country authorities, to be agreed before project commencement and discussed during scoping missions. - MOP elements include project scope, objectives, outcomes, indicators, timelines, and form the basis for the project’s RBM. ### IMF Project Participation and Country Commitment - IMF participation described by mission types, number and timing of missions, expected outputs, and reference to TF-allocated funds. - Country commitment includes identification of a senior official as main counterpart, a liaison person, government provision of necessary data, possible steering group, assistance for long-term experts (entry permits, work facilities), and regular reporting on reform progress. - Termination/suspension examples: insufficient reform progress (e.g., no substantial action on recommendations in the previous 12 months); external factors such as security issues. ### Research, FARI Model, Outreach and Training - Continued support for IMF research and analytical work; research proposals must discuss how results inform capacity development. - FARI: modeling framework to perform EI fiscal analysis; public release of the FARI methodology in October 2015 led to growing demand, particularly from LICs and LMICs. - Phase 2 will use FARI for EI fiscal regime design and revenue forecasting and develop FARI as a revenue administration tool. - Outreach and training: continued horizontal and peer learning; two courses envisaged: - Macroeconomic Management in Resource-rich Countries; - Energy Subsidy Reform (already developed; TF to support ongoing provision). - Increased use of online training and pre-TA or follow-up training to support sustainable capacity development. - Level of women participation will be included as an indicator in the MNRW2 log frame. ### Integration and Coordination - Integration with IMF surveillance and lending: MNRW2 CD engagements expected to provide inputs for structural benchmarks and policy recommendations. - Gender: TF will ensure reviewed government policies do not have a gender bias; promote women’s participation in training. - Full integration with other IMF capacity development activities, including RTACs: HQ addresses strategic issues; RTAC resident advisors provide implementation support. - Coordination with development partners including World Bank, EITI, Norway Oil for Development Programme, SECO, Australia, UN, EC, UK DFID, and OECD on international tax issues. - Consultation with private sector and civil society organizations customary during project delivery. --- ### 4. Governance and Operational Arrangements ### A. Governance Structure - Multi-partner TF with a Steering Committee (SC) composed of partner representatives and IMF staff; chair may rotate among partners. - IMF staff serve as the Secretariat to the SC. - Committee meetings held annually, with additional meetings as necessary. - SC functions: strategic guidance, endorse annual work plan, review progress, coordinate TA, receive TF mission planning information. - Annual (or biannual if requested) report on TF activities and project results; a version will be made public. ### B. Work Plan - Projects initiated within an annual work plan, subject to SC approval. - Project selection is demand-driven; prioritization criteria: country need, authorities’ commitment, distribution across regions and modules. - Work plan includes applied research, conferences, workshops, and training. - At each SC meeting IMF delivers a report on execution of previously endorsed work plan. ### C. Dissemination Policies - Dissemination guided by IMF transparency policies. - TA reports may be shared with SC members with recipient consent on a no-objection basis and confidentiality expectations. - Sharing with non-SC partners determined case-by-case based on legitimate interest and engagement. - IMF will encourage countries to publish TA reports. ### D. Accountability and Results Based Management (RBM) - Project-level log frames aligned with IMF’s RBM System define inputs, objectives, outcomes, verifiable indicators, and milestones. - TF-level strategic log frame sets goals and monitors progress for the project portfolio. - Two types of strategic indicators: results directly attributable to TF work and results partially reflecting TF effects. - Quality control: screening and selection of experts; regular supervision and backstopping support from IMF HQ; regular self-assessments. - IMF Area Departments monitor beneficiary countries’ progress in implementing TF-supported reforms. - Project status and information accessible to Partners via IMF’s partner portal. - Semi-annual SC meetings present summaries of progress at project and portfolio level. ### E. Independent Evaluation - Independent evaluation after no fewer than three years; expected in FY2020 to assess effectiveness and sustainability and inform future operations. ### F. Visibility - TF to intensify outreach and partner visibility through operational guidelines, website, booklets, newsletters, conferences/press releases. - Partners will be systematically recognized in outreach activities. ### G. Project Management - Small dedicated TF team to manage scaled-up operation with functions to monitor performance, ensure RBM reporting quality, strengthen coordination, and enhance partner visibility. - Proposed TF team composition: - One full-time program manager with overall coordination responsibility. - One research assistant. - One administrative assistant. --- ### 5. Financing and Administrative Issues ### A. Financing - Estimated total cost of MNRW TA under the TF for an initial five-year phase: US$30 million. - Financing sought in advance for the entire five-year period to provide stability and continuity. - Illustrative budget of the MNRW-TF Phase 2 (US $’000) — totals and selected line items: - TA Delivery: FY17 670; FY18 3,120; FY19 3,200; FY20 3,270; FY21 3,350; FY22 3,286; Total 16,896 - Targeted TA: FY17 540; FY18 2,990; FY19 3,060; FY20 3,130; FY21 3,210; FY22 3,286; Total 16,216 - Scoping missions: FY17 130; FY18 130; FY19 140; FY20 140; FY21 140; FY22 0; Total 680 - Research and Analytical Tools: FY17 90; FY18 370; FY19 380; FY20 390; FY21 400; FY22 405; Total 2,035 - Workshops and Training: FY17 0; FY18 1,930; FY19 1,140; FY20 1,170; FY21 1,190; FY22 1,220; Total 6,650 - Program Management: FY17 355; FY18 360; FY19 370; FY20 580; FY21 390; FY22 400; Total 2,455 - Staff Costs*: FY17 355; FY18 330; FY19 339; FY20 343; FY21 347; FY22 356; Total 2,070 - Independent Evaluation: FY20 200; Total 200 - Steering Committee: FY17 0; FY18 30; FY19 31; FY20 37; FY21 43; FY22 44; Total 185 - Sub-total: FY17 1,116; FY18 5,780; FY19 5,091; FY20 5,410; FY21 5,330; FY22 5,310; Total 28,037 - TF Management Fee (7%): FY17 78; FY18 405; FY19 356; FY20 379; FY21 370; FY22 372; Total 1,960 - Total: FY17 1,194; FY18 6,190; FY19 5,447; FY20 5,788; FY21 5,700; FY22 5,682; Total 30,000 ### B. Administrative Arrangements - Partner contributions made into the multi-partner MNRW subaccount under the IMF’s Framework Administered Account for Selected Fund Activities (“SFA Instrument”). - An operating unit for Phase 2 established under the Subaccount to receive contributions and finance MNRW-TF activities. - All funds commingled; financial arrangements governed by Letter of Understanding and Subaccount/SFA terms. - IMF will administer and account for partner contributions according to IMF financial regulations and applicable practices. - Recruitment of outside consultants and experts follows IMF normal procedures. - Procurement threshold: for goods and services beyond a threshold amount (currently US$50,000), a competitive bidding process with at least three competitive bids is required. - IMF charges all project-related costs on the basis of actual cost, including IMF staff time, and a trust fund management fee of 7 percent. - IMF will provide partners with reports on subaccount expenditures and commitments; operations subject to annual audits; separate TF budget execution reporting at each SC meeting. --- ### Appendix 1 — Phase 1 Results, Lessons and Case Studies ### Phase 1 high-level results and lessons - Phase 1 achievements highlighted: - Nine countries reformed EI fiscal regime laws based on IMF advice. - Capacity to manage resource wealth increased in 12 countries using FARI; training averaged 20 participants per workshop. - Four regional conferences held with 60–90 participants each. - A public version of the FARI model released with Technical Note and Manual. - Five countries formed special units within revenue administrations for large EI companies. - New or revised public financial management frameworks implemented in 11 countries. - One country reformed SWF governance and investment management. - Three countries improved reporting of natural resource revenues in national accounts. - A new government revenue data template developed and field-tested; EITI announced collaboration with IMF on the template. - Draft Guide to Analyze Natural Resources in the National Accounts released online for comment. ### Project activation and performance (2011–2016) - Total activated projects: 56 - 43 country projects in 22 countries: - 30 currently active projects - 9 projects completed — 8 evaluated by independent midterm evaluation (6 “very good”, 2 “good”) - 2 projects terminated (Mongolia module 1; Niger module 1) due to lack of commitment or stalled reform - 2 projects never activated due to lack of commitment (Iraq module 4; Uganda module 4) - 8 research projects (5 active; 3 completed resulting in publications or inputs) - 5 conferences (4 undertaken) - RBM outcomes (of 37 active projects at October 2015): - 38 percent assessed as “largely” or “fully achieved” - 49 percent assessed as “partially achieved” - 14 percent assessed as “not achieved” - Success factors: strong political and institutional commitment; good inter-ministerial cooperation; timely, relevant TA combining policy, modeling, and legal drafting. - Headwinds: security issues (e.g., Mali); health crises (Ebola in Sierra Leone and Guinea); lack of commitment from authorities. - Midterm Evaluation lessons incorporated into MNRW2 design: better project design, realistic objectives, milestones, risk analysis, more hands-on TA, continuity, increased RTAC participation, improved synergies with IMF Legal Department, enhanced RBM, clarified inactive project processes, more efficient SC reporting, improved budgeting. ### Phase 1 Case Studies (Box 5) — selected outcomes - Mauritania (Module 1, 2011–2014): - Withholding tax at 15 percent levied in 2013 on non-resident transactions; this measure raised revenue equivalent to 0.33 percent of GDP in 2013. - March 2014 parliamentary changes to the mining code made mining companies subject to standard VAT (a zero rate for exporters), removing prior VAT exemptions for mining companies. - Tax revenue performance (excluding natural resources) improved by around 13 percent between 2010 and 2015. - Guinea (Initial TA program, 2012–2015; Module 1 focus): - Complete review, redrafting, and adoption of the Mining Code by the National Assembly; related Fiscal Regulations and Model Agreement prepared. - VAT regime for mining companies significantly strengthened; roughly half of the mining projects modeled. - Commencement of PFM project (module 3) in 2014 with results including fiscal forecasting and budgeting strategy, strengthened fiscal governance for parastatals, and implementation of a VAT refund system for the mining sector. - Kenya (Module 1, 2013–2016): - Development of schedule in new model production sharing contract; revised income tax law for extractive industries now in force; draft Mining Bill incorporating project suggestions. - FARI model critical to reform development; workshops transferred model use to local officials. - Mongolia (Module 3, began 2013, ongoing): - Expansion of MTFF scope and sophistication; cash flow forecasting models developed; support in drafting a sovereign wealth fund law leading in early 2016 to parliamentary agreement to create such a fund. --- ### Phase 2 Strategic Logical Framework and Objectives — highlights - STRATEGIC OBJECTIVE: Assist low and lower-middle income countries to derive maximum benefit from their oil, gas and mineral resources. - Example impact indicators: - Average resource revenues as a share of GDP increases in MNRW-TF countries. - Average potential government take for a standard resource revenue project in MNRW-TF countries (sources: WoRLD 1/; Project managers; FARI Model). - A significant majority of participating countries implement reforms to improve management of EI revenues (MTFFs, comparable in-year budget reports, budget classification, revenue collection information, consolidation of cash balances, reporting contingent liabilities and fiscal risks). - Improved exchange rate regimes and macroprudential policies in a significant majority of participating countries. - Select Phase 2 objectives, expected results, and verifiable indicators: - OBJECTIVE 1: IMPROVED EI FISCAL REGIMES - Indicator: 10 participating countries have amended their fiscal regimes broadly in line with IMF advice. - OBJECTIVE 2: ENHANCED EI REVENUE ADMINISTRATION AND COLLECTION - Indicators: 8 participating countries with clear organizational structures and with compliance risks identified and mitigation programs in place. - OBJECTIVE 3: BETTER MANAGEMENT OF EI REVENUES - Indicators: 10 participating countries with revised or introduced credible MTFF integrated with the budget; 10 participating countries with better controls over EI revenues; 10 participating countries with budget classifications and charts of accounts incorporating EI details. - OBJECTIVE 4: EFFECTIVE EXCHANGE RATE AND MACROPRUDENTIAL POLICIES - Indicators: 4 participating countries with exchange rates responsive to supply and demand and appropriate FX intervention procedures; 4 participating countries with enacted macroprudential institutional frameworks and tools. - OBJECTIVE 5: IMPROVED STATISTICS FOR NATURAL RESOURCES - Indicators: Participating countries’ charts of accounts and budget classifications sufficient to complete the EITI summary data template in line with GFSM 2014; pilot countries developing national accounts capacity for natural resource industries; a workshop conducted with EITI counterparts. - OBJECTIVE 6: TOPICAL RESEARCH AND ANALYTICAL WORK - Indicator: 3 publications produced setting out good practices and lessons learned. - OBJECTIVE 7: CAPACITY DEVELOPMENT THROUGH LEARNING OPPORTUNITIES - Indicators: Number of participants from MNRW eligible countries in online or face-to-face IMF courses; number and percentage of participants who are women; at least one regional/international conference or workshop per year for eligible countries. ### MNRW-TF Summary Reporting on Outputs (monitoring metrics) - Number of TA missions completed (total and by module). - Number of TA reports produced (total and by module). - Number of workshops completed. - Number of research papers published. - Number of people trained (disaggregated by online and face-to-face and by sex and region). *Source: IMF Managing Natural Resource Wealth Trust Fund (MNRW-TF) program document.* ### 1. IMPROVING THE MANAGEMENT OF NATURAL RESOURCES ________________________________ 7 ### 1. IMPROVING THE MANAGEMENT OF NATURAL RESOURCES ### Background - The Managing Natural Resource Wealth Trust Fund (MNRW-TF) was established in 2011 by the International Monetary Fund (IMF) to help countries manage natural resource wealth. - The MNRW-TF leverages the IMF’s expertise to integrate policy, administrative and legislative dimensions and to advance fiscal transparency. - The trust fund was designed to address failures by many resource-rich developing countries to realize the full development potential of natural resources, particularly where extractive industries (EI) are significant. - Recent developments increasing TA needs: - The Addis Tax Initiative highlighted the critical need for revenue mobilization (RM) to finance the Post-2015 Development Agenda, especially for low-income countries (LICs). - The fall in commodity prices has worsened fiscal positions and increased pressure to reform natural resource and non-natural resource revenue systems. - Commodity price volatility has increased the need to address exchange rate and macroprudential policies to smooth macroeconomic and financial impacts. - Growing focus on climate change and potential reduced demand for fossil fuels increases TA needs, including in countries facing significant depletion of natural resources. - Phase 1 was extended to expire in April 2017 (originally May 2011–April 2016). The amount contributed to Phase 1 is US$24.7 million. - Phase 2 (“MNRW2”) is proposed to continue and expand TA support. ### MNRW-TF Phase 1 Achievements — Overview - Phase 1 demonstrated success in assisting resource-rich countries in implementing reforms and building capacity in managing natural resources. - A Results Based Management (RBM) methodology was used to measure and monitor reform implementation and inform Steering Committee (SC) decisions. - The midterm evaluation (covering commencement to April 2014) rated projects very good on relevance and good on other OECD-DAC criteria; recommendations were incorporated into Phase 2 design. ### Key Achievements Supported by the MNRW-TF — Results to February 2016 (Box 1) - Since commencement in May 2011 the Steering Committee approved 43 projects in 22 countries, 8 research projects and 5 conferences/workshops. - Nine countries have reformed (either enacted or introduced to the governing authority) laws relating to EI fiscal regimes based on IMF advice. - Capacity to use the Fiscal Analysis for Resource Industries (FARI) model increased in 12 countries; training workshops averaged 20 participants per workshop. - Five countries formed special units within the revenue administration to administer large EI companies. - New or revised frameworks for public financial management are being implemented in 11 countries to better manage natural resource revenues. - One country reformed the governance structure and investment management of its Sovereign Wealth Fund (SWF). - Three countries improved their reporting of natural resource revenues in national accounts. - Four regional conferences on EI fiscal issues were held (East Africa, Asia-Pacific, Andean region (two)); attendance 60–90 participants each. - A Washington, DC conference produced papers used as the basis for a book on International Tax Issues for the Extractives Industries to be released in 2016. - Two handbooks released: Administering Fiscal Regimes for Extractive Industries: A Handbook (translated into French and Spanish) and Sovereign Asset-Liability Management Guidance for Resource-rich Countries. - A new template for collecting government revenue data from natural resources was developed and field-tested; the Extractive Industries Transparency Initiative (EITI) agreed to collaborate with the IMF in using the template. - A public version of the FARI model was developed and released with an accompanying Technical Note and Manual. - A draft guide on specific compilation issues for natural resources in macroeconomic statistics was completed for online comment. ### Recommendations of the Midterm Evaluation (Box 2) - Strengthen project design, planning and TA delivery through scoping missions; more focused and realistic objectives, outcomes and time frames; defining milestones and road maps; more in-depth risk analysis; delivering more hands-on TA; and aiming at continuity of engagement and capacity development. - Increase participation of IMF Regional Technical Assistance Centers (RTACs) and regional advisors. - Improve synergies and coordination among Fiscal Affairs Department (FAD) modules and with the IMF’s Legal Department. - Consider providing TA support on monetary and capital markets and statistics under non-TF IMF TA. - Enhance use of research projects and workshops to achieve TF objectives. - Enhance RBM as a monitoring tool by disaggregating outcomes and objectives in the log frame and using one set of scores for the bottom-up approach. - Clarify process for dealing with inactive projects. - Enhance efficiency of reporting to the SC. - Improve project budgeting to reduce over costing. - Appoint a full-time supra-manager in FAD financed by the TF to enhance standardization of the RBM system and distill lessons across projects. - The Steering Committee considered these recommendations and reflected them in the Phase 2 design. ### Geographic Coverage and Project Distribution - Approved budget distribution by region (Figure 1): 64% Africa, 29% Asia-Pacific, 6% Latin America and Caribbean, 2% Middle East. - Table 1 — Total Project Countries by Region: - Africa: Number of Eligible Countries 24; Percentage of Eligible Countries 48; Number of Project Countries 13; Percentage of Project Countries 59. - Asia-Pacific: Number of Eligible Countries 11; Percentage of Eligible Countries 22; Number of Project Countries 5; Percentage of Project Countries 23. - Europe: Number of Eligible Countries 1; Percentage of Eligible Countries 2; Number of Project Countries 0; Percentage of Project Countries 0. - Middle East and Central Asia: Number of Eligible Countries 9; Percentage of Eligible Countries 18; Number of Project Countries 2; Percentage of Project Countries 9. - Latin America and Caribbean: Number of Eligible Countries 5; Percentage of Eligible Countries 10; Number of Project Countries 2; Percentage of Project Countries 9. - Total: Number of Eligible Countries 50; Percentage of Eligible Countries 100; Number of Project Countries 22; Percentage of Project Countries 100. - Most Phase 1 projects focused on EI fiscal regimes and revenue management (Module 1), with later projects addressing modules on collection and management (Modules 2 and 3). - Fewer projects than envisaged addressed asset and liability management and statistics (Modules 4 and 5), partly due to limited demand. ### Phase 2 Priorities and Funding (Overview) - Phase 2 (“MNRW2”) will build on Phase 1 success with key features: - Targeted and intensive TA engagement with three broad changes: 1. Expanded scope to emphasize international tax policy and administration (BEPS concerns) and provide TA on energy subsidy reform. 2. More flexible delivery modes, including assigning experts to remain in-country for extended periods and use of in-country or regional long-term advisors. 3. Strengthened project design and planning with greater upfront engagement from country authorities via scoping missions and memorandums of partnership. - Consolidation of the Fiscal Analysis for Resource Industries (FARI) model as a TA-enhancing tool. - Continued analytical work with stronger focus on dissemination and learning through on-line and face-to-face training and horizontal learning (conferences, workshops). - A refined modular design retaining modules on: EI fiscal regime design; EI revenue administration; EI macro-fiscal policies and public financial management; and statistics for natural resources—replacing the asset and liability management module with a module on exchange rate regimes and macro-prudential policies in resource-rich countries. - Primary focus on low- and lower-middle-income resource-rich countries, with possible Steering Committee expansion to some upper-middle-income countries or a region where appropriate. - Funding requirement for Phase 2: - The trust fund will require funding of around $30 million covering the six-year period from mid-2016 to mid-2022 to enable deeper TA engagement, some expansion of country coverage, and addressing emerging issues. *Source: IMF Managing Natural Resource Wealth Trust Fund (MNRW-TF) program document.* ### 2. MNRW-TF Phase 2 Proposal ### 2. MNRW-TF Phase 2 Proposal ### Objectives and scope - Phase 2 of the TF will continue to focus on supporting the proper management of natural resource wealth among developing countries. - The objective for MNRW2 is to build economic policy and administrative capacities to enable LICs and lower-middle-income countries (LMICs) to derive the maximum benefit from their oil, gas, and mineral resources, so as to facilitate their economic development and poverty reduction goals. - The log frame for MNRW2 (as distinct from project-level log frames) aims at reporting results at a strategic level, complementing and aggregating project-specific RBM indicators. ### Anticipated broader benefits - Improved development prospects of beneficiary countries are expected to provide a useful demonstration to their peers. - Better management of natural resources is expected to have important benefits for global commodity markets. - The TF’s analytical and policy lessons are expected to represent a global good and help strengthen the effectiveness of both development partners and the IMF. - These expected benefits build on the achievements under Phase 1 of the TF and the broader objectives of the trust fund. ### Monitoring, results framework, and accountability - The Phase 2 strategic log frame is documented in Appendix 2. - The log frame builds on the application of this approach in Phase 1 and is fully consistent with the IMF’s enhanced RBM framework. - The system involves: - the definition of a standardized catalog of TA project ‘objectives’ and ‘outcomes’; - the requirement to define project milestones; - establishing a framework for periodic scoring of, and reporting against, objectives, outcomes, and milestones. - The log frame’s design reflects the programmatic structure of the TF to provide full accountability for each module. ### Illustrative module activity (graphic elements preserved from source) - A time series showing MNRW-TF Modules across years: 2013, 2014, 2015, 2016. - Vertical scale indicators as presented: 0 2 4 6 8 10 12 14. - Module identifiers shown: 1 2 3 4 5. *Source: MNRW-TF Phase 2 Proposal, IMF.* ### Box 3. Expected Benefits of the MNRW2 ### Box 3. Expected Benefits of the MNRW2 ### Expected benefits for resource-rich countries - Maximization of revenues over the life-cycle of extractive projects, thanks to a fiscal regime that balances government and industry interests, and an effective administration for collecting revenues. - More effective spending of resource revenues to assist countries in meeting sustainable development goals, such as in education and health, with the help of budgetary mechanisms tailored to the large size of resource revenue, and its volatile and finite nature. - Better governance throughout the government by enhancing accountability through transparency in the public service dealing with resource revenues. - More investment in the natural resource sector thanks to an attractive, stable investment climate that induces socially responsible behavior by companies. - Smoother impact on the economy of potentially large and unpredictable swings in commodity prices, in order to support stable economic growth and financial sector stability. - Creation of an information base on the economic impact of natural resources exploitation to inform strategic policy decisions. ### Expected benefits for the global community - Foster economic and social development in low-income countries (LICs) and lower-middle-income countries (LMICs) by using aid money to leverage the development impact of natural resource revenues. - An enlarged and more secure global supply of energy and minerals. - Improved climate for investment and production so that international resource companies can operate consistently with their corporate social responsibility standards and with their home countries’ development policies. ### Expected benefits for partners - A mechanism for coordinating partner assistance in the area of natural resource wealth management and RM. - The opportunity to participate in discussion of IMF-led analytical and diagnostic tools sponsored by the TF. - Enhanced visibility and greater impact on the ground from leveraging a multi-donor trust fund. ### Expected benefits for the IMF - Improved coordination and knowledge exchange with other TA providers. - IMF’s TA delivery will benefit from the programmatic approach used in the TF and the governance structure emphasizing results orientation and accountability. ### Monitoring, reporting, and evaluation arrangements - Monitoring and evaluation of the MNRW2 will be continuous and overseen by the SC. - An independent midterm evaluation is scheduled in FY2020. - Project-specific RBM progress reports will be included in both the annual and midyear reports. - Strategic log frame results will be included in the annual reports only. - Further refinements to the log frame will be done in consultation with the SC. *Source: MNRW2 (Box 3).* ### Box 4. Key Elements of Memorandum of Partnership ### Box 4. Key Elements of Memorandum of Partnership ### Overview - The Memorandum of Partnership (MOP) will be a formal agreement of cooperation between the IMF and the country authorities. - The MOP should be agreed before the project commences and be discussed during the scoping mission, if undertaken. - The MOP is envisaged to include the following elements. ### Project Description - Project scope, objectives, outcomes, indicators, and timelines. - This should be the basis for the project’s RBM. ### IMF Project Participation - Explanation of the proposed technical assistance to be provided by the IMF. - Details to include: - Nature and scope of proposed missions (e.g., headquarters missions, short-term expert visits, and long-term experts). - The number and possible timing of the missions. - Expected outputs (e.g., TA report, training). - Reference to the amount of funds allocated by the TF for the project. ### Other Partners’ Inputs and Participation - Inclusion of any complementary input by bilateral donors to specific country projects. - Reflection of partners’ operations on the ground or any additional assistance (e.g., complementary TA or training). - Purpose: enhance partner coordination and avoid duplication. ### Country Commitment - Identification of a senior official (e.g., Minister, Deputy Minister or Permanent Secretary) to be the main government counterpart for the project. - Identification of a liaison person for organizational and administrative arrangements for the project. - Government commitment to provide all available data necessary for the project. - Possible establishment of a steering group to oversee the project to ensure recommendations are properly considered. - For long-term experts, authorities expected to assist with entry permits and provide work facilities. - Inclusion of regular reporting by the government on reform progress as part of the MOP. ### Termination and Suspension of the Project - Specification of circumstances for suspension or termination. - Examples: - Insufficient reform progress by the authorities (e.g., no substantial action on recommendations in the previous 12 months). - External factors such as security issues that make it difficult for the project to continue. ### Research and Analytical Work (Phase 2) - Continued support for the IMF’s leading research and analytical work on managing natural resource wealth to identify good or best practice approaches and distill lessons from experiences. - Research proposals should include discussion on how research results will be taken into account in the design of subsequent capacity development interventions. - Results to be disseminated widely to policy practitioners, development partners and other stakeholders via publications, and regional and international workshops and conferences. ### FARI Model - Continued consolidation of FARI as a TA-enhancing tool during Phase 2. - FARI is a modeling framework developed by FAD to perform EI fiscal analysis. - FARI analyses how annual project cash flows over the life of an EI project are shared between investors and the government, through detailed modeling of: - A particular fiscal regime, - A set of economic and financial assumptions, - An EI project example (e.g., a petroleum field or mine). - Built-in analytical routines include Average Effective Tax Rate, Marginal Effective Tax Rate, and progressivity and stochastic analysis. - Public release of the FARI methodology in October 2015 led to growing demand, particularly from LICs and LMICs. - Phase 2 support: - Use of FARI for assisting in the design of EI fiscal regimes and revenue forecasting. - Development of FARI as a revenue administration tool for comparing actual revenues with model results. ### Outreach and Training - Continued use of horizontal and peer learning opportunities in Phase 2 to disseminate issues, practices and policies for managing natural resource wealth. - Lessons from Phase 1: - International conferences and workshops allowed participating countries to exchange views and learn from international experts. - In-country workshops enhanced capacity in project countries. - Phase 2 design focus: ensure workshops and conferences are cost-effective and well-targeted. - Support for other training methods: - Development and ongoing provision of on-line training courses and face-to-face courses relating to managing natural resource wealth. - Two courses envisaged: - Macroeconomic Management in Resource-rich Countries; - Energy Subsidy Reform (the later course has already been developed, so the TF will only support the ongoing provision of the course). - Online tools provide a cost effective means to scale up knowledge transfer, including to the public. - Courses to provide preparation for officials in advance of TA delivery or follow-up training to support sustainable capacity development, as noted in the external mid-term evaluation of the MNRW-TF. ### Integration and Close Coordination for Success - Integration of TF operations with other IMF activities and coordination with other development partners is essential for effectiveness and efficiency. - Phase 1 experience demonstrated the need for integration and coordination for the TF to achieve results. #### A. Integration between Capacity Development and IMF Surveillance and Lending - Capacity Development (technical assistance and training) under MNRW2 will continue to be integrated with the IMF’s other core activities, surveillance and lending. - The IMF’s capacity development is demand-driven and seeks full involvement and buy-in of recipient countries. - MNRW2 capacity development engagements expected to provide inputs for: - Design of structural benchmarks (for IMF lending programs). - Policy recommendations (under Article IV consultations). - IMF area department teams will help identify and prioritize capacity development and monitor implementation of MNRW2 TA advice. - The IMF provides comprehensive capacity development to LICs and LMICs, including policy diagnostics and evaluation, policy design, legal drafting, support for implementation, and follow-up through regular surveillance or program consultations. - In countries supported by an IMF lending program, TA advice often informs the design of the fiscal component of the program. - IMF capacity development is provided by functional departments staffed by specialists who: 1. Advise country authorities on reform agenda and support implementation; 2. Advise IMF area departments on technical issues to support surveillance and lending; 3. Contribute to building and maintaining the IMF’s institutional knowledge in areas of core expertise. #### Gender - Capacity development under the TF will incorporate the IMF’s broader work on gender, focusing on labor force participation, inequality and economic opportunities. - TA under MNRW2 would not be expected to directly address gender issues given its macro-fiscal, statistical, and macro-financial focus, but will ensure reviewed government policies do not have a gender bias. - Increased training provides opportunity to enhance capacity development of women through active promotion of their participation in face-to-face and online training courses. - The level of women participation will be included as an indicator in the MNRW2 log frame. #### B. Full Integration with Other IMF Capacity Development Activities, including through RTACs - Work under the TF is an integral part of the IMF capacity development work program overseen by the interdepartmental Committee on Capacity Building (CCB), chaired by a Deputy Managing Director. - The CCB reviews capacity development priorities every fall and its conclusions feed into IMF-wide planning and budget discussions. - Guided by CCB priorities, work plans are developed to cover individual countries; part delivered by the TF after SC endorsement. - Headquarters-based staff deliver TA directly and oversee IMF-hired short-term and long-term advisors, including RTAC advisors, to ensure quality and consistency. - HQ-led TA focuses on strategic issues; short- and long-term experts focus on implementation. - RTACs complement Phase 2 work: HQ addresses complex diagnostic and strategic issues; RTAC resident advisors provide practical implementation support. - In MNRW-TF, RTACs are mostly involved in TA related to revenue administration and revenue management (modules 2 and 3). - During Phase 2, project managers will continue to ensure no overlap or inconsistency between MNRW-TF and RTAC TA through close coordination and communication with HQ staff supervising RTAC advisors. - The new RBM will deliver a common platform for reporting on both MNRW-supported TA reforms and RTAC-delivered TA to ensure complementary and synchronized efforts. #### C. Coordination with Other Development Partners - Phase 1 enabled synergies with many development partners; this will continue in Phase 2. - IMF staff and external experts involved in TF-funded country projects will work closely with development partners operating in-country, consulting them before missions and engaging them throughout the reform process. - Close collaboration with the World Bank to avoid overlap and ensure synergies: - IMF approaches MNRW from macro-fiscal and macro-financial perspectives; the World Bank approaches from a sector-specific perspective. - To avoid fragmentation and duplication, with SC assent the MNRW2 will invite participants from the World Bank and the EITI to attend as observers of SC meetings. - Continued collaboration with other TA providers: Norway Oil for Development Programme, Switzerland State Secretariat for Economic Affairs (SECO), Australia, United Nations (UN), the European Commission (EC) and UK Department for International Development. - Particular importance of collaboration with the OECD given increased emphasis on international tax issues. - IMF participation in a joint working group on international tax issues with the OECD, World Bank, and UN; work in progress to develop a “tax platform” jointly by the IMF, OECD, UN and the World Bank to coordinate development of toolkits and guidance for developing countries on international tax issues. - Consultation with other stakeholders, such as the private sector and civil society organizations (CSOs), will continue; project managers customarily meet with private sector and CSO representatives to obtain perspectives on EI issues. *Source: IMF — Box 4. Key Elements of Memorandum of Partnership (MOP), MNRW program materials.* ### 4. Governance and Operational Arrangements ### 4. Governance and Operational Arrangements ### A. Governance Structure - A multi-partner trust fund (TF) provides synergies, efficiency, coordinated TA-funding administration, uniform global reach, and greater visibility. - Steering Committee (SC): - Composed of partner representatives and IMF staff. - Chaired by a partner representative; chairmanship may rotate among partners. - IMF staff serve as the Secretariat to the SC. - Committee meetings held annually, with additional meetings as necessary. - Other stakeholder organizations may be invited as observers when appropriate. - Secretariat ensures a regular flow of information throughout the year and may consult informally with the SC. - A report will be prepared annually (or biannually if requested by the SC) on TF activities and project results; a version will be made public. - SC functions: - Provide strategic guidance and contribute to policy and priority setting. - Endorse an annual work plan and review progress and program performance. - Coordinate TA on managing natural resource wealth among the TF, partners, and other stakeholders. - Receive TF information on mission planning. ### B. Work Plan - Projects under Phase 2 are initiated within an annual work plan, subject to prior approval of the SC. - Project selection and TA delivery are demand-driven based on identified needs and country requests. - Typical process: IMF area departments work with member countries to identify needs supporting reform agendas, drawing on TA departments’ expertise. - TA demand expected from new requests and ongoing Phase 1 work. - TA prioritization criteria: - Country need. - Authorities’ commitment to reform. - Distribution across regions and modules. - TA organized into projects reflecting the modules described in section 2.C. - Work plan also includes applied research, conferences, workshops, and training for dissemination. - Work plan submission and reporting: - Work plan submitted to SC for endorsement at regular meetings. - At each SC meeting IMF will deliver a report on execution of previously endorsed work plan. ### C. Dissemination Policies - Dissemination guided by IMF transparency policies. - TA reports: - May be shared with SC members with consent of the TA recipient on a no-objection basis and with confidentiality expectations. - Sharing with non-SC development partners determined case-by-case based on legitimate interest and engagement in related activities. - IMF will continue to encourage countries to publish TA reports. - Operational guidelines for the SC and roles of SC members and the Secretariat to be discussed and agreed at the first SC meeting. ### D. Accountability and Results Based Management (RBM) - Monitoring and management of TF resources to foster accountability, effectiveness, and sustainability. - Project-level arrangements: - Each project establishes at outset a comprehensive log frame, aligned with IMF’s new RBM System. - Log frames consistent with modules described in section 2.C. - Log frames define inputs, country-level objectives and outcomes, verifiable indicators, and intermediate milestones. - Objectives, outcomes, and indicators drawn from IMF’s RBM log frame catalog. - TF-level arrangements: - A strategic log frame will set goals and monitor progress for the project portfolio (see Appendix 2). - Strategic (top down) impact indicators for the trust fund as a whole and modular (bottom up) indicators for portfolios within each module. - Two types of strategic indicators: - Results directly attributable to TF work (e.g., implementation of reforms). - Results partially reflecting TF effects (e.g., resource revenue as a share of GDP). - Modular strategic outcomes aligned with project-level objectives; indicators based on aggregation of project-level results. - Quality control and supervision: - IMF TA departments supervise, carry out, and backstop TA delivery under the TF. - Operational quality control via: (a) screening and selection of experts; (b) regular supervision and backstopping support from IMF headquarters; (c) regular self-assessments against predefined project objectives and outcomes. - IMF Area Departments will monitor beneficiary countries’ progress in implementing TF-supported reforms in the context of IMF-supported country programs and surveillance. - Information access and reporting: - Project status and relevant information accessible to Partners via IMF’s partner portal, including financial information, legal documentation, project documents, progress reports, project status, and self-assessments. - Accountability for TF performance within semi-annual SC meetings presenting summaries of progress at project and portfolio level. ### E. Independent Evaluation - An independent evaluation will be conducted after no fewer than three years of operation. - The evaluation is expected to take place in FY2020. - Purpose: assess effectiveness and sustainability of Phase 2 work and formulate recommendations for improvement. - Findings will inform operations for the remainder of the six-year phase and beyond. ### F. Visibility - TF to intensify outreach, enhancing public profile and partner visibility. - IMF developing operational guidelines on partner visibility and communications for externally-funded capacity development to provide a common recognition framework. - Phase 2 outreach aims to expand beyond publications using existing tools (website, booklets, partner debriefings) supplemented by newsletters, conferences/press releases. - Partners will be systematically recognized in outreach activities, including acknowledgements in publications. ### G. Project Management - Establishment of a small dedicated TF team to manage scaled-up operation. - Team functions: - Monitor performance of country programs. - Ensure high-quality reporting against RBM framework and to the SC. - Strengthen synergies and coordination with other TA providers. - Enhance visibility of Phase 2 partners. - Proposed TF team composition: - One full-time program manager with overall coordination responsibility. - One research assistant. - One administrative assistant. ### 5. Financing and Administrative Issues #### A. Financing - Estimated total cost of MNRW TA under the TF for an initial five-year phase: US$30 million. - Financing sought in advance for the entire five-year period to provide stability and continuity. - Illustrative budget of the MNRW-TF Phase 2 (US $’000): - TA Delivery: FY17 670; FY18 3,120; FY19 3,200; FY20 3,270; FY21 3,350; FY22 3,286; Total 16,896 - Targeted TA: FY17 540; FY18 2,990; FY19 3,060; FY20 3,130; FY21 3,210; FY22 3,286; Total 16,216 - Scoping missions: FY17 130; FY18 130; FY19 140; FY20 140; FY21 140; FY22 0; Total 680 - Research and Analytical Tools: FY17 90; FY18 370; FY19 380; FY20 390; FY21 400; FY22 405; Total 2,035 - Research Projects: FY17 90; FY18 180; FY19 190; FY20 190; FY21 200; FY22 203; Total 1,053 - FARI Country STX Follow-up Visits: FY17 0; FY18 180; FY19 190; FY20 190; FY21 200; FY22 203; Total 963 - Workshops and Training: FY17 0; FY18 1,930; FY19 1,140; FY20 1,170; FY21 1,190; FY22 1,220; Total 6,650 - Workshops & Conferences: FY17 0; FY18 310; FY19 315; FY20 320; FY21 330; FY22 340; Total 1,615 - Training: FY17 0; FY18 1,620; FY19 830; FY20 850; FY21 860; FY22 880; Total 5,040 - Program Management: FY17 355; FY18 360; FY19 370; FY20 580; FY21 390; FY22 400; Total 2,455 - Staff Costs*: FY17 355; FY18 330; FY19 339; FY20 343; FY21 347; FY22 356; Total 2,070 - Independent Evaluation: FY17 0; FY18 0; FY19 0; FY20 200; FY21 0; FY22 0; Total 200 - Steering Committee: FY17 0; FY18 30; FY19 31; FY20 37; FY21 43; FY22 44; Total 185 - Sub-total: FY17 1,116; FY18 5,780; FY19 5,091; FY20 5,410; FY21 5,330; FY22 5,310; Total 28,037 - TF Management Fee (7%): FY17 78; FY18 405; FY19 356; FY20 379; FY21 370; FY22 372; Total 1,960 - Total: FY17 1,194; FY18 6,190; FY19 5,447; FY20 5,788; FY21 5,700; FY22 5,682; Total 30,000 - Illustrative budget breakdown figures provided (percent of total and percent of TA delivery budget) in supporting figures. #### B. Administrative Arrangements - All partner contributions made into the multi-partner MNRW subaccount under the IMF’s Framework Administered Account for Selected Fund Activities (the “SFA Instrument”). - An operating unit for Phase 2 established under the Subaccount to receive contributions and finance MNRW-TF activities. - All funds commingled; basis for financial arrangements: Letter of Understanding and subject to Subaccount and SFA instrument terms and conditions. - IMF will administer and account for partner contributions in accordance with IMF financial regulations and applicable practices and procedures. - Recruitment of outside consultants and experts will follow IMF normal procedures. - Procurement threshold and bidding: - For procurement of goods and services beyond a threshold amount (currently US$50,000), IMF regulations require a competitive bidding process with at least three competitive bids. - Costing and fees: - IMF will charge all project-related costs of TA on basis of actual cost, including IMF staff time. - IMF charges a trust fund management fee of 7 percent. - Reporting and audit: - IMF will provide partners with reports on subaccount expenditures and commitments. - Operations and transactions through the subaccount subjected to annual audits. - Separate reporting on TF budget execution provided at each SC meeting and available via IMF partner portal. ### Appendix 1 — Key High-Level Results and Lessons from MNRW-TF Phase 1 (summary highlights) - Phase 1 achievements and outputs: - Nine countries have reformed (enacted or introduced to governing authority) EI fiscal regime laws based on IMF advice. - Capacity to manage resource wealth increased in 12 countries using IMF’s FARI model; training typically involved more than one workshop per country with an average of 20 participants per workshop. - Four successful regional conferences held (East Africa, Asia-Pacific, Andean region (2 conferences)) with between 60 and 90 participants each. - A Washington, DC conference produced papers used as basis for a book on International Tax Issues for the Extractives Industries to be released in 2016. - A public version of the FARI model released with accompanying Technical Note and Manual. - Five countries formed special units within revenue administration to administer large EI companies. - Administering Fiscal Regimes for Extractive Industries: A Handbook released and translated into French and Spanish. - A Washington DC conference held with 70 participants from 12 eligible countries on revenue administration risks and strategies. - New or revised public financial management frameworks being implemented in 11 countries. - One country reformed SWF governance and investment management. - Release of handbooks on Sovereign Asset-Liability Management Guidance for Resource-rich Countries. - Three countries improved reporting of natural resource revenues in the national accounts. - A new government revenue data template for natural resources developed and field-tested; EITI announced collaboration with IMF on the template. - A draft Guide to Analyze Natural Resources in the National Accounts released online for comment. - Project activation and performance (2011–2016): - Total activated projects: 56 - 43 country projects in 22 countries: - 30 currently active projects - 9 projects completed — 8 evaluated by independent midterm evaluation (6 “very good”, 2 “good”) - 2 projects terminated (Mongolia module 1; Niger module 1) due to lack of commitment or stalled reform - 2 projects never activated due to lack of commitment (Iraq module 4; Uganda module 4) - 8 research projects (5 active; 3 completed resulting in publications or inputs) - 5 conferences (4 undertaken) - RBM outcomes (of 37 active projects at October 2015): - 38 percent assessed as “largely” or “fully achieved” - 49 percent assessed as “partially achieved” - 14 percent assessed as “not achieved” - Factors contributing to success: - Strong political and institutional commitment. - Good inter-ministerial and inter-agency cooperation. - Timely, relevant TA combining policy, modeling, and legal drafting skills. - Factors for slow or stalled projects: - Security issues (e.g., Mali). - Health crises (Ebola in Sierra Leone and Guinea). - Lack of commitment or responsiveness from authorities. - Midterm Evaluation lessons incorporated into MNRW2 design: - Need for better project design, realistic objectives, milestones, road maps, in-depth risk analysis, more hands-on TA, continuity of engagement. - Increased participation of RTACs and regional advisors. - Improved synergies among FAD modules and with IMF Legal Department. - Enhanced use of research projects and workshops. - Enhanced RBM as a monitoring tool. - Clarify process for dealing with inactive projects. - More efficient reporting to the SC. - Improved project budgeting to reduce over costing. *Source: International Monetary Fund — Managing Natural Resource Wealth Trust Fund Phase 2 governance, operational arrangements, financing, and Phase 1 results.* ### Box 5. MNRW-TF Phase 1 Case Studies ### Box 5. MNRW-TF Phase 1 Case Studies ### Mauritania: Module 1 (2011–2014) - A withholding tax at 15 percent was levied in 2013 on any transaction involving non-residents to limit profit shifting through subsidiaries; this measure raised revenue equivalent to 0.33 percent of GDP in 2013. - In March 2014, the Mauritanian parliament approved changes to the mining code making mining companies subject to standard VAT (a zero rate for exporters), removing prior VAT exemptions for mining companies. - These law modifications are expected to reinforce tax revenue performance (excluding natural resources), which improved by around 13 percent between 2010 and 2015. - The project provided a forecasting model of resource revenue to the Mauritanian authorities. - Success factors: strong political support and management commitment from key ministries. ### Guinea: Initial TA program (2012–2015; Module 1 focus) - Fiscal regime design led to complete review, redrafting, and adoption of the Mining Code by the National Assembly; related redrafted Fiscal Regulations and Model Agreement were prepared. - The VAT regime for mining companies was significantly strengthened; roughly half of the mining projects were modeled, with remaining modeling pending data from mining companies. - Commencement of the public financial management project (module 3) in 2014 enhanced prospects for sustaining reforms, with initial results including: - Formulation of a strategy for developing capacities related to fiscal forecasting and budgeting for an expected surge of mining resources; - A framework to strengthen fiscal governance and transparency of parastatals and governmental entities involved in natural resource management; - Implementation of a VAT refund system for the mining sector. - Success factors: very strong support from all relevant ministers and the President; strong high-level and technical-level commitment despite political/economic headwinds and the Ebola crisis. - Ongoing challenge: weak capacity, being addressed by authorities. ### Kenya: Module 1 (2013–2016) - Reforms included: (1) development of a schedule in the new model production sharing contract; (2) a revised income tax law for extractive industries now in force reflecting much of the project’s advice; (3) a draft Mining Bill incorporating project suggestions. - The FARI model was critical to reform development; workshops transferred model use to local officials. - The project had high visibility at the “Kenya Rising” conference (September 2013) and the EAC workshop on fiscal management of oil and gas in East Africa (January 2014). - Success factors: strong commitment of senior government officials; lateral communication among agencies; strong relationships with Cabinet Secretaries and Principal Secretaries; combined skills in policy, modeling, and legal drafting; coordination with the World Bank’s large TA program in Kenya. - Remaining challenge: limited capacity; led authorities to seek further MNRW-TTF projects (module 3 revenue management and interest in module 2 revenue administration). ### Mongolia: Module 3 (macro-fiscal and PFM; began 2013, ongoing) - Reforms achieved despite commodity price declines and production slowdown: - Significant expansion in scope and sophistication of the medium-term fiscal framework (MTFF), with focus on quantifying fiscal risks and measures to manage them; - Development of cash flow forecasting models to manage seasonal variations in highly volatile revenues; - Support in drafting a sovereign wealth fund law aimed at inter-generational savings, leading in early 2016 to final agreement by Parliament to create such a fund (complementary to the asset and liability management Module 4 project). - The Ministry of Finance strongly supported the reforms. - Principal headwind: strong political pressures to increase spending because of infrastructure needs in a large, sparsely populated country. - Project coordination: close cooperation with the World Bank on MTFF enhancements and with the U.S. Treasury Department on cash management. ### Cross-cutting success factors across Phase 1 case studies - Strong high-level political support and senior management commitment. - Transfer of technical tools and models (FARI, forecasting, cash flow models) and training/workshops to local officials. - Multi-disciplinary teams combining policy, modeling, and legal drafting skills. - Coordination with development partners (World Bank, U.S. Treasury). - Capacity constraints remain a recurring implementation challenge. --- ### Phase 2 Strategic Logical Framework: Strategic Objective and High-Level Impact Indicators - STRATEGIC OBJECTIVE: Assist low and lower-middle income countries to derive maximum benefit from their oil, gas and mineral resources. - Impact indicators (examples): - Average resource revenues as a share of GDP increases in MNRW-TF countries. - Average potential government take for a standard resource revenue project in MNRW-TF countries (sources: WoRLD 1/; Project managers; FARI Model). - A significant majority of participating countries implement reforms to improve management of EI revenues, including medium term expenditure estimates, comparable in-year budget reports, budget classification, revenue collection information, consolidation of cash balances, and reporting of contingent liabilities and other fiscal risks (source: Project managers). - Improved exchange rate regimes and macroprudential policies in a significant majority of participating countries, including exchange rates responsive to supply and demand and establishment of macroprudential policy bodies with legal frameworks (source: Project managers). --- ### Phase 2 Objectives, Expected Results, and Verifiable Indicators (highlights) - OBJECTIVE 1: IMPROVED EI FISCAL REGIMES - Result 1.1: Adoption of amended EI fiscal regimes that improve host government revenues. Verifiable indicators: - 10 participating countries have amended their fiscal regimes broadly in line with IMF advice. - Using the FARI model, estimated EI revenue potential is improved due to fiscal regime reforms in participating countries. (Source: Project managers) - OBJECTIVE 2: ENHANCED EI REVENUE ADMINISTRATION AND COLLECTION - Result 2.1: Organizational arrangements enable more effective delivery of strategy and reforms. Indicator: 8 participating countries with a clear organizational structure along functional lines and/or taxpayer segments established and operating for the EI sector. (Source: Project managers) - Result 2.2: Development of effective risk management for the EI sector. Indicators: - 8 participating countries with compliance risks identified, assessed, ranked, and quantified for the EI sector. - 8 participating countries with a compliance improvement program in place to mitigate identified risks for the EI sector. (Source: Project managers) - OBJECTIVE 3: BETTER MANAGEMENT OF EI REVENUES - Result 3.1: Management through a credible medium-term fiscal framework integrated with the budget. Indicators: - 10 participating countries that have revised or introduced a credible MTFF integrated with the budget that includes EI revenues. - 10 participating countries with better controls over EI revenues and expenditure commitments and payments. (Source: Project Managers) - Result 3.2: Improved coverage and quality of fiscal reporting of EI revenues and expenditures and related financial assets and liabilities. Indicator: 10 participating countries that have budget classifications and charts of accounts incorporating specific EI details in line with international accounting standards. (Source: Project Managers) - Result 3.3: Effective asset and liability management framework for EI revenues. Indicators: - EI revenues and expenditures progressively conducted through a treasury single account consistent with international best practices in 10 participating countries. - 10 countries that disclose and manage contingent liabilities and other fiscal risks related to EI operations more comprehensively. (Source: Project Managers) - OBJECTIVE 4: EFFECTIVE EXCHANGE RATE AND MACROPRUDENTIAL POLICIES - Result 4.1: Exchange rate flexibility consistent with FX and monetary policy regime without undue financial stability risks. Indicator: 4 participating countries in which the exchange rate fluctuates with demand and supply and have appropriate instruments and operational procedures for FX intervention; transition plans and prudential regulations are appropriately sequenced to manage FX risks. (Source: CD-PORT) - Result 4.2: Macroprudential framework established and policy tools implemented. Indicator: 4 participating countries in which legislation enacts an institutional framework granting mandate and powers over macroprudential tools, a systemic risk monitoring framework is established, and authorities can map risk assessment into policy action. (Source: CD-PORT) - OBJECTIVE 5: IMPROVED STATISTICS FOR NATURAL RESOURCES - Result 5.1: Improved quality of data on government revenues from natural resources. Indicator: Participating countries have charts of accounts and budget classifications providing detail necessary to complete the EITI summary data template in line with GFSM 2014 recommendations. (Source: Project managers) - Result 5.2: Enhanced capacity to compile national accounts for natural resource industries. Indicators: - Pilot countries developed capacity for compiling national accounts covering natural resource industries. - A workshop conducted in collaboration with EITI counterparts to support monitoring of the UN’s Sustainable Development Goals, particularly Goal 17 on strengthening domestic resource mobilization. (Sources: Project managers; CD-PORT) - OBJECTIVE 6: TOPICAL RESEARCH AND ANALYTICAL WORK - Result 6.1: Identification of good or best practice approaches and lessons learned. Indicator: 3 publications are produced setting out good or best practices and lessons learned related to managing natural resource wealth. (Source: CD-PORT) - OBJECTIVE 7: CAPACITY DEVELOPMENT THROUGH LEARNING OPPORTUNITIES - Result 7.1: Capacity developed via IMF training. Indicators: Number of participants from MNRW eligible countries in online or face-to-face IMF courses relating to management of natural resource wealth; number and percentage of participants who are women. (Source: ICD Training Statistics) - Result 7.2: Shared learnings by senior officials. Indicator: At least one regional/international conference or workshop per year for MNRW eligible countries to exchange views and experiences in managing natural resource wealth. (Source: Project managers) ### MNRW-TF Summary Reporting on Outputs (monitoring metrics) - Number of TA missions completed (total and by module). - Number of TA reports produced (total and by module). - Number of workshops completed. - Number of research papers published. - Number of people trained (disaggregated by online and face-to-face and by sex and region). --- --- _Source: https://www.imf.org/-/media/files/capacity-developement/mnrw/mnrw-program-janaury-2017.pdf_