## _dp1302

## Source details

**Canonical URL:** [_dp1302](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_dp1302.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_dp1302.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_dp1302.pdf.json)

---

### Introduction: scope and framing
- Sizable natural resource endowments in a number of sub-Saharan African (SSA) countries provide an unparalleled opportunity for economic growth and development.
- Revenue uses highlighted:
  - Address human capital and infrastructure deficits that impede sustained, broad-based, and inclusive growth.
  - Achieve improvements in social indicators.
- Two-pronged approach of the publication:
  - Outline main policy considerations and options in managing natural resource wealth drawing on IMF analysis, the World Bank, academic research, and experience within and outside SSA.
  - Provide recommended further reading at the end of each chapter (not reproduced here) to inform policymakers and stakeholders.
- Chapter topics (framing from the source):
  - Chapter 2: Stylized facts and the resource curse question.
  - Chapter 3: Macroeconomic policy considerations (volatility, exhaustibility, consume now vs. later, investing resource rents).
  - Chapter 4: Fiscal frameworks.
  - Chapter 5: Public investment management (“investing in investing”).
  - Chapter 6: Revenue mobilization (tax policy and administration).
  - Chapter 7: Governance, transparency, and safeguarding the public interest.

### Fundamental challenges of managing natural resource wealth
- Three defining characteristics (verbatim emphasis preserved):
  - "The volatile and unpredictable nature of natural resource prices, and hence resource revenue, complicates macroeconomic management and budget planning, and often imparts a high degree of procyclicality to economic policies."
  - "The exhaustibility of these resources and related revenue raise complex economic and political issues concerning intergenerational equity and long-term fiscal and external sustainability."
  - "Transforming natural resource wealth into productive human, physical, and financial assets is difficult because many SSA countries lack the institutional and administrative capacity to manage public finances well."
- Consequences of poor management (verbatim highlights):
  - "Macroeconomic volatility is an important contributor to the growth-damaging 'resource curse,' and wide swings in government spending generally make spending less effective and less productive."
  - Resource-rich SSA countries have experienced: vicious boom and bust cycles with commodity prices; difficulties in macroeconomic policy implementation and real exchange rate pressures; wasteful public investment; weak governance and rent capture by vested interests.

### Is there a resource curse in SSA? — Stylized facts and empirical context
- Definition and distributional facts:
  - Resource-rich economies defined as "those whose exports of these resources exceeded one-fourth of total goods exports in 2005–10."
  - "Nearly 10 percent of the annual output of SSA countries and 50 percent of their exports come from nonrenewable natural resources."
  - "Natural resources are a major export in about 20 of the 45 countries in the region."
  - "Seven of these countries are oil exporters, accounting for more than half of the region’s natural resource exports."
  - Threshold reiterated: "25 percent of total exports derived from natural resources."
- Performance and revenue dependence:
  - "Real GDP per capita growth for these economies has been higher than for other SSA countries since 2000, although the translation of resource rents into higher living standards for the populations as a whole has been slow."
  - "Of the 20 resource-rich countries, half are fiscally dependent on budget revenue derived from natural resource extraction." (Half of 20 = 10 fiscally dependent.)
  - Fiscal dependence criterion: "countries with resource revenue that exceeds 20 percent of total revenue" (this group includes the seven oil exporters plus Botswana, the Democratic Republic of the Congo (DRC), and Guinea).
  - "All other resource exporters receive less than 15 percent of budgetary revenue from natural resources, and only two of these countries (Niger and Zambia) are projected to markedly increase their revenue take from this sector in the medium term."
- Magnitude and prospective revenues:
  - Net present value calculations based on projected reserves, depletion rate, resource prices, and discount rate.
  - Real discount rate assumed: "4 percent."
  - For some oil exporters: "the value of resource exports exceeding the size of nonresource GDP in several countries."
- Commodity composition and country examples:
  - Major exports in non-oil resource-rich economies: "Gold, diamonds, and other precious stones."
  - Dependence on base metals and uranium: Niger and Zambia.
  - Broad mixtures: DRC, Guinea, Namibia, Sierra Leone.
  - Prospective/export prospects: Mozambique, Sāo Tomé and Príncipe, Uganda, Liberia, Malawi.
  - Resource export diversification examples: Ghana (oil), Sierra Leone (iron ore), Tanzania (gas).
  - Cross-regional observation: identified resource levels in SSA are far below other regions; "it is likely that the bulk of exploitable natural resources remain to be revealed."

### Resource revenue dependence and future prospects
- Countries able to anticipate sizable future revenue inflows (conditional on appropriate tax frameworks): Ghana, Liberia, Mozambique, Niger, Tanzania, and Uganda.
- Estimates are based on currently known natural resources; "the bulk of exploitable natural resources in SSA likely remain to be discovered."
- Caution: "The price outlook for commodities is very uncertain and the current high prices may not last, which would have adverse consequences for the value of wealth."

### Fiscal and social spending patterns in oil exporters
- Oil exporters spend considerably less as a share of GDP on public education and health than other countries:
  - Median expenditure ratio on public education and health in 2006–09: "3 percent of GDP for oil exporters."
  - Comparison medians: "more than 8 percent of GDP for middle-income countries" and "about 6 percent of GDP" for non-resource-rich low-income countries.
- Cross-country variation:
  - Angola increased expenditures on health and education through 2009 to "more than 8 percent of GDP," but expenditures fell subsequently.
  - Angola’s human development index "rose most rapidly among oil exporters during 2005–10."

### Sources of a resource curse in SSA
- Prominent contributing factors where a resource curse has occurred:
  - Weaknesses in natural resource and macroeconomic management.
  - Poor governance and rent seeking with capture by elites.
  - Weak forward and backward linkages from primary exports to the rest of the economy.
  - Exchange rate and price pressures causing loss of international competitiveness and reductions in manufacturing (Dutch disease).
  - Volatility in resource prices leading to damaging boom-bust cycles.

### Recent performance and intersectoral linkages
- Sustained resource price boom since the mid-2000s contributed to improved performance of resource exporters, but durability is uncertain.
- Since 2000, real GDP per capita growth has on average been higher in resource exporters and higher still in the fiscally dependent subsample.
- Contribution of natural resource production to GDP growth varies markedly:
  - Dominant in Equatorial Guinea and the DRC.
  - More modest in South Africa and Zambia.
- Deviations from trend of nonresource growth are highly correlated with annual commodity price variations; resource and nonresource growth are significantly positively correlated.

### GDP versus GNI and distributional concerns
- GDP per capita can mislead about income accruing to nationals; gross national income (GNI) can be lower because extraction often involves foreign-owned firms, capital, and skilled personnel.
- Disparity between GDP and GNI is relatively large for oil-producing countries, less so for other resource exporters.
- Higher GNI per capita in resource exporters has not consistently translated into better outcomes on Human Development Index (HDI) or other welfare measures:
  - Improvements in some health areas (e.g., immunization) seen in some countries.
  - Literacy and infant mortality only slightly better among resource-rich countries.
  - School enrollment rates considerably worse compared with nonresource economies.

### Policy implications: Consume now versus later; investment and uncertainty
- Key policy challenge: deciding how much resource wealth to consume now versus later, balancing present welfare with intergenerational equity.
- Classical permanent income (consumption-smoothing) model recommendation: fixed/constant consumption equal to the implicit return on the natural resource asset.
- Limitations of classical consumption approach for SSA:
  - Severely restrictive; excludes role for investment and may cause underinvestment in capital-scarce countries.
  - Some windfalls should be used upfront to increase capital stock and raise growth potential.
  - Fails to address capital and credit constraints faced by many resource-rich SSA countries.
  - Does not reflect reality that current generations may be poorer than future ones, implying higher marginal utility of consumption today.
  - Ignores uncertainty of wealth estimates: prices and production volumes are volatile; many reserves remain undiscovered.

### Procyclical fiscal policies and boom-bust cycles (Box 3.1 highlights)
- Empirical findings:
  - Revenue surges were often immediately spent, producing large year-to-year government expenditure changes.
  - Arezki and Ismail (2010): asymmetric response of current and capital expenditure to oil price changes—current expenditure rises rapidly in booms; capital expenditure falls more rapidly in busts.
  - Thomas and Bayoumi (2009): a 1 percentage point of GDP increase in oil revenue reduces the non-oil fiscal balance by 0.41 percent of GDP on average.
  - Country sensitivity varies (e.g., Republic of Congo close tracking of expenditure and oil revenue; weaker relationship in Equatorial Guinea and Gabon).
- Investment vs consumption choices:
  - In capital-scarce countries, allocating a substantial share of resource revenue to capital spending (infrastructure) can have large payoffs.
  - Complementary current expenditure on education and health yields high returns.
  - In fragile/resource-intensive countries, public spending on security and justice may yield significant growth returns.
- Botswana example:
  - Sustainable Budget Index (SBI) principle: "non-investment" spending financed only with nonresource revenue.
  - Pula Fund and official reserves helped limit boom-bust effects.
- Supply-side and absorptive-capacity constraints:
  - Sharp domestic investment increases risk inflationary pressures and loss of competitiveness (Dutch disease).
  - Absorptive constraints often reflect weak capacity to choose and implement productive projects.
- External sustainability: benchmarking the nonresource current account:
  - Nonresource current account excludes resource export proceeds, investment income outflows associated with resource investments, and imports related to extraction.
  - Box 3.3 Nigeria illustration:
    - Non-oil current account deficit projected to decline to about "16 percent of non-oil GDP" in the medium term, falling below the sustainable annual drawdown of wealth defined with a "4 percent" real rate of return and annuitized over 40 years.
    - Assessment sensitive to changes in resource prices and real rate of return; a significant fall in oil prices from 2013 levels would change the picture.
- Coping with volatility: two strategies
  - Hedging resource prices (example: Mexico option to sell oil at $70 a barrel exercised in mid-2008).
  - Stabilization or resource funds: channel surplus into foreign assets when prices high relative to benchmark; withdraw when low. Operational aim: stabilize expenditures, not resource revenue. Most stabilization funds failed when designed on contingent revenue rules.

### Sovereign funds and country cases (Box 3.1 continued)
- Timor-Leste Petroleum Fund:
  - Established in 2005; managed by the Ministry of Finance with day-to-day operations by the central bank; independent Investment Advisory Board validates investment decisions.
  - Acts as saving and stabilization fund; aim to maintain real value and prevent expenditure volatility.
  - Projected sustainable income based on estimated real return of "3 percent"; transfers out in excess of this are subject to parliamentary oversight.
  - Since 2009 transfers exceeded projected sustainable income due to front-loading essential investment expenditure.
  - Invests only in external assets; audited annually by internationally accredited auditors; adheres to the Santiago Principles.
  - As of end-December 2012, fund value was "about $11.8 billion," equivalent to nearly eight times projected budgetary expenditure for 2012 and more than three times nominal GDP (about nine times non-oil GDP).
- Nigeria’s Excess Crude Account (ECA) and sovereign wealth fund (SWF):
  - ECA established in 2004; by end-2008 ECA reached "$20 billion"; resources used to counter the 2008–09 financial crisis.
  - ECA was subject to ad hoc withdrawals and weak legal framework; by end-2011 the ECA was almost depleted.
  - New SWF operational since July 2012; during 2012 revenue replenished fund to "$9.2 billion" at end-2012.
  - SWF has three components: stabilization fund, infrastructure fund, intergenerational saving fund; stricter rules reduce likelihood of sharp drawdowns though allocation modalities remain to be determined.

### Fiscal and monetary policy mix: scenarios and risks (Box 3.4)
- Policy scenarios on handling a windfall from higher resource prices:
  - Government saves all windfall and central bank keeps foreign currency → real exchange rate remains stable; no adverse implications for real economy but no benefits from higher public investment.
  - Reserves accumulated by central bank equal resource windfall; effects depend on whether government spends increased revenues and whether central bank sterilizes increased demand for local currency. If sterilization matches increased spending, inflationary effects are muted.
  - Government spends increased revenue and central bank fails to accumulate reserves → magnified real exchange rate appreciation with possible adverse consequences.
- Private-sector behavior can offset prudent public-sector responses (Ricardian equivalence concept).
- Empirical finding (2000–11): mixed success in insulating real exchange rate from resource price pressures; gold and “other” exporters avoided appreciation, whereas oil exporters and copper/cobalt exporters (Zambia) saw the real exchange rate follow real export prices.

### Fiscal frameworks: objectives, anchors, and guidance
- Fiscal framework elements:
  - Indicators to assess fiscal stance supporting macrofiscal stability.
  - Rules anchoring short- to medium-term fiscal path while offering flexibility to channel precautionary savings to urgent spending needs.
  - Appropriate benchmark for long-term fiscal sustainability.
  - Strong institutional setup with capacity to forecast revenue, manage expenditure, and set medium-term targets.
- Short- and medium-term anchors:
  - Nonresource balance anchors (fiscal balance excluding net resource revenue): manage demand fluctuations and insulate policy from revenue volatility; can be scaled to nonresource GDP.
  - Price-based rules or structural balance rules: smooth fiscal effects using a reference price (moving average); shortcoming: ignores exhaustibility and production-volume changes.
  - Expenditure growth limits: cap growth in nominal/real terms or as percentage of resource revenue; simple and monitorable but may reduce incentives to mobilize nonresource revenue.
- Guidance by resource horizon:
  - Short resource horizon: recommend nonresource primary balance (overall primary balance excluding interest payments and net resource revenue) scaled to nonresource GDP.
  - Long resource horizon: recommend price-based rule or structural primary balance indicator, possibly combined with an expenditure growth rule or ceiling.
- Long-term sustainability:
  - Permanent income hypothesis useful but needs modification to allow medium-term scaling up of investment followed by scaling down to preserve net financial wealth.
  - Alternative approaches: fiscal sustainability framework combined with modified debt sustainability analysis or models assuming windfalls used primarily for public investment; results sensitive to investment efficiency and quality assumptions.

### Chile’s experience with fiscal rules (Box 4.2)
- Chile produces about "one-third of the world’s copper."
- Copper accounted for "54 percent of Chile’s exports" and nearly "14 percent of its fiscal revenue in 2012."
- Copper reserves expected to last at least "50 years."
- Chile had annual real GDP growth averaging "5.3 percent during 1991–2011."
- Fiscal rule adopted in 2001 with two objectives:
  - Contribute to fiscal and macroeconomic stability by insulating public spending from copper price volatility and activity.
  - Improve the net asset position of the central government.
- Annual structural balance target initially set at a surplus of "1 percent of GDP."
- 2006 fiscal responsibility law:
  - Set guidelines for computing the structural balance.
  - Required the administration to set a target within "90 days of taking office."
- Two sovereign wealth funds established by law:
  - Pension Reserve Fund (PRF): receives "between 0.2 and 0.5 percent of GDP" to cover pension guarantees.
  - Economic and Social Stabilization Fund (ESSF): receives any budget surplus left after PRF and debt amortization to finance deficits during revenue shocks.
- Structural balance target adjusted over time but remained a strong anchor; institutional features include independent experts estimating potential GDP and long-run copper prices and publication of annual budget reports with four-year targets.
- Applicability concern: structural balance rule may be difficult in many SSA countries due to poorly defined growth cycles and data/capacity constraints.

### Transforming oil assets into capital assets: Gabon (Box 5.2)
- 2009 public investment program (PIM): US"$12 billion," equivalent to "more than 150 percent of non-oil GDP," over the next "seven years."
- Program focus: roads, port upgrades, energy supply (hydroelectric and thermal).
- Institutional arrangements:
  - National agency for major public works established.
  - Technical and personnel support from Bechtel, guiding program during the next "five years."
- Implementation gaps and required actions:
  - Ensure independent review of investment appraisal.
  - Clarify program timeline and deliverables.
  - Transfer knowledge from Bechtel into local hands to build capacity.
- Public Investment Management Index reference year: "2010." Index scale: "0 (worst) to 4 (best)."

### Taxation of extractive industries: Mozambique (Box 6.1)
- Resource context: coal, natural gas, mineral sands, hydropower-based electricity, and potential oil.
- Four major projects (hydropower, coal, gas, heavy sands) already in production.
- Foreign direct investment (FDI): "just over $5 billion in 2012," more than double 2011; over "80 percent of the increase" in mining and gas.
- IMF staff estimates:
  - Natural resource sector could contribute "2 percentage points of additional economic growth each year."
  - Share could exceed "25 percent of GDP by end-2023" (from "less than 7 percent in 2011").
- Natural resource revenue:
  - Accounted for "less than 4 percent of total revenue in 2011."
  - Could rise to "about 40 percent of total revenue by 2023," depending on development and regulation.
- Fiscal regime design steps:
  - 2007 model contracts introduced with progressive hydrocarbon taxation and sector-specific incentives.
  - New legislation to consolidate fiscal terms: royalty, corporate income tax with sector-specific rules (ring fencing, depreciation, capital gains, withholding rates), and a progressive mechanism revised for petroleum.
  - Authorities aimed to finalize draft legislation in the first half of 2013.
- Fiscal approaches and instruments:
  - Contractual schemes, tax/royalty systems plus licensing, and state participation discussed.
  - Suggested combination for many developing countries: modest royalty + standard CIT + rent-targeting tax.
- FARI model:
  - Excel-based diagnostic tool to estimate government tax take, permanent income, and guide fiscal policy.
  - Used in Liberia to project iron ore impacts.
- Tax administration and audit:
  - Weak capacity, overly complex regimes, blurred responsibilities among ministries/SOEs/regulators.
  - Strengthening requires public financial management improvements, rationalization of responsibilities, transparency, and better use of audit rights.
  - MNRW-TTF (2010) provided IMF technical assistance; eight SSA countries benefited.

### Audit prerequisites, challenges, and tax vulnerabilities (Box 6.3 highlights)
- Cost audit is prerequisite for fiscal audit; overstating costs understates profits and reduces taxes.
- Audit rights usually in legislation or contracts; companies must keep records on site but only for limited periods.
- Audit challenges:
  - Human resources: difficulty matching company expertise; outsourcing to reputable firms may be cost effective.
  - Poor governance: collusion risks; transparency and parliamentary/civil-society involvement crucial.
- Tax policy vulnerabilities:
  - Corporate income tax competition and "race to the bottom" trends.
  - Erosion of withholding taxes by tax treaties.
  - Transfer pricing abuses and difficulty detecting them.
  - Treatment of gains on transfer of extraction rights varies (e.g., Norway charges taxes only on rent, not on gains).
  - Double taxation issues and foreign tax credits.
- Certification and transparency practices:
  - Republic of Congo established quarterly certification by external auditors for oil revenue; effectiveness depends on auditor competence and government follow-up.
  - International guidance: IMF Guide on Resource Revenue Transparency (2007b); Natural Resource Charter (2010); EITI (37 resource-rich countries participating as of March 2013, including 20 from SSA).
  - Timor-Leste adopted five transparency pillars (Box 7.2).

### Timor-Leste’s five principles for governance and transparency (Box 7.2)
- Adherence to Global Standards:
  - Full compliance with EITI revenue verification and participation requirements.
  - All receipts from taxes and royalties transferred to the Timor-Leste Petroleum Fund.
  - Monitoring by a board with representatives from other countries, donors, companies, civil society, investors, and international organizations.
- Best Practice in Sovereign Wealth Management:
  - Ensured by Petroleum Fund rules and the fiscal framework.
- Education and Information:
  - Broadcasting the 13-day parliamentary budget debate; context: about "half of the population is illiterate."
- Accountability and Accessibility:
  - Timor-Leste Transparency Portal (www.transparency.gov.tl) hosts specialized portals on budget, procurement, government results, and aid management.
- Communications and Good Governance:
  - Publication of Council of Ministers decisions on the official website within "two days" of weekly meetings.

### Transparency, information provision, oversight, and auditing (Chapter 4 excerpt)
- Special attention to tax administration and public financial management due to stresses from large/concentrated revenue streams.
- Governments should produce regular reports showing all revenue from resource extraction and how revenue has been collected and managed.
- EITI participation offers reconciliation structure to guard against theft before receipts reach the treasury.
- Operational rules for investing/managing proceeds (financial assets or physical investment) should be transparent and integrated with fiscal policy.
- Full disclosure requires publishing past resource transactions and balances, national resource company reporting, discussion of contingent liabilities and risks, and in-year reports.
- Reporting frequency: "at least monthly in the case of hydrocarbon production." Example: Nigeria publishes monthly production figures with some delay.
- External independent verification (audits, EITI) and active dissemination (Internet, press, TV, radio) are recommended. Burkina Faso cited for wide promulgation of fiscal information.
- EITI status as of March 2013:
  - "Some 20 countries in sub-Saharan Africa were participating in the EITI as of March 2013."
  - "Seven of these countries were, or will soon become, major oil producers."
  - "By March 2013, 11 countries in SSA had satisfi ed these requirements."
  - EITI compliant SSA countries (March 2013): Burkina Faso; the Central African Republic; the Republic of Congo; Ghana; Liberia; Mali; Mozambique; Niger; Nigeria; Tanzania; and Zambia.
  - EITI candidate SSA countries (March 2013): Cameroon; Chad; Côte d’Ivoire; the Democratic Republic of the Congo; Guinea; Madagascar; São Tomé and Príncipe; Sierra Leone; and Togo.
    - Note: Madagascar and Sierra Leone were temporarily suspended pending resolution/remedial actions.

### Policy recommendations and institutional guidance (summary)
- Integrate investment and asset-management mechanisms with fiscal policy under transparent operational rules.
- Produce and publicize regular, in-year, and comprehensive budget and sector reports to improve accountability and enable public scrutiny.
- Strengthen tax administration and public financial management systems to handle stresses from large, concentrated revenue inflows.
- Limit discretionary authority of tax officials; establish clear internal control, audit, and external verification across the revenue chain.
- Use internationally recognized frameworks (EITI) and internationally accepted accounting and auditing standards for national and international companies.
- Consider autonomous anti-corruption and investigative agencies to supplement financial controls.
- Clarify legal frameworks on resource ownership, licensing, tax and regulatory powers, and roles of national resource companies to limit abuse from unclear responsibilities.
- Publish contracts and limit discretionary tendering; ensure transparency in government equity stakes and noncommercial obligations of companies.

*Italicized source attribution preserved as required: BOOM, BUST, OR PROSPERITY? MANAGING SUB-SAHARAN AFRICA’S NATURAL RESOURCE WEALTH (excerpts from Chapters 1–2).*

### 1.  Economic development – Africa, Sub-Saharan.  2.  Natural resources –

### BOOM, BUST, OR PROSPERITY? MANAGING SUB-SAHARAN AFRICA’S NATURAL RESOURCE WEALTH

### Introduction: scope and framing
- Sizable natural resource endowments and the potentially large economic proceeds from their extraction in a number of sub-Saharan African (SSA) countries provide an unparalleled opportunity for economic growth and development.
- Revenue from these resources can be used to address human capital and infrastructure deficits that are obstacles to sustained, broad-based, and inclusive growth, and to achieve improvements in social indicators.
- The publication uses a two-pronged approach:
  - Outline the main policy considerations and options in managing natural resource wealth, drawing on experience within and outside SSA, IMF analysis and policy advice, the World Bank, and academic research.
  - Provide a list of recommended further reading at the end of each chapter (not reproduced here) to inform policymakers and stakeholders on theoretical and analytical underpinnings.
- Key organizational elements (chapter topics as framed in the source):
  - Chapter 2: Stylized facts and the resource curse question.
  - Chapter 3: Macroeconomic policy considerations (volatility, exhaustibility, consume now vs. later, investing resource rents).
  - Chapter 4: Fiscal frameworks.
  - Chapter 5: Public investment management (“investing in investing”).
  - Chapter 6: Revenue mobilization (tax policy and administration).
  - Chapter 7: Governance, transparency, and safeguarding the public interest.

### Fundamental challenges of managing natural resource wealth
- Three defining characteristics of natural resource wealth that complicate management (verbatim emphasis preserved):
  - "The volatile and unpredictable nature of natural resource prices, and hence resource revenue, complicates macroeconomic management and budget planning, and often imparts a high degree of procyclicality to economic policies."
  - "The exhaustibility of these resources and related revenue raise complex economic and political issues concerning intergenerational equity and long-term fiscal and external sustainability."
  - "Transforming natural resource wealth into productive human, physical, and financial assets is difficult because many SSA countries lack the institutional and administrative capacity to manage public finances well."
- Consequences of poor management highlighted in the Introduction:
  - "Macroeconomic volatility is an important contributor to the growth-damaging 'resource curse,' and wide swings in government spending generally make spending less effective and less productive."
  - "Natural resource–rich countries across the region have seen a vicious boom and bust cycle with the rise and fall of commodity prices over time; difficulties in the implementation of macroeconomic policies and real exchange rate pressures; wasteful public investment; and weak governance, where vested interests have frequently captured economic rents that should otherwise accrue to the state."

### Is there a resource curse in SSA? — Stylized facts and empirical context
- Definitional and distributional facts:
  - Resource-rich economies defined as "those whose exports of these resources exceeded one-fourth of total goods exports in 2005–10."
  - "Nearly 10 percent of the annual output of SSA countries and 50 percent of their exports come from nonrenewable natural resources."
  - "Natural resources are a major export in about 20 of the 45 countries in the region."
  - "Seven of these countries are oil exporters, accounting for more than half of the region’s natural resource exports."
  - "The other 13 resource-rich economies receive at least a quarter of their export proceeds from mining."
  - Threshold used to define resource-rich countries: "25 percent of total exports derived from natural resources."
- Performance and revenue dependence:
  - "Real GDP per capita growth for these economies has been higher than for other SSA countries since 2000, although the translation of resource rents into higher living standards for the populations as a whole has been slow."
  - "Of the 20 resource-rich countries, half are fiscally dependent on budget revenue derived from natural resource extraction." (Half of 20 implies 10 countries.)
  - Fiscal dependence criterion stated: "countries with resource revenue that exceeds 20 percent of total revenue" (this group includes the seven oil exporters plus Botswana, the Democratic Republic of the Congo (DRC), and Guinea).
  - "All other resource exporters receive less than 15 percent of budgetary revenue from natural resources, and only two of these countries (Niger and Zambia) are projected to markedly increase their revenue take from this sector in the medium term."
- Magnitude and prospective revenues:
  - "For several countries, the prospective public revenue possible from existing resource wealth is sizable compared with current nonresource GDP, although with significant variation across countries."
  - Net present value calculations for resource wealth are estimated (method notes in source): "based on projected natural resource reserves, the resource depletion rate, resource prices, and the discount rate."
  - Real discount rate assumed in these calculations: "4 percent."
  - For some oil exporters: "the value of resource exports exceeding the size of nonresource GDP in several countries."
- Commodity composition and country examples:
  - "Gold, diamonds, and other precious stones are the major commodity exports of most of the region’s non-oil resource-rich economies."
  - "A few depend heavily on base metals and uranium (Niger and Zambia) or benefit from a broad mixture of products (DRC, Guinea, Namibia, and Sierra Leone)."
  - Prospective resource exporters and prospective reserves mentioned: "Mozambique, Sāo Tomé and Príncipe, and Uganda are among several countries seeking to exploit oil and gas reserves; prospects for offshore oil deposits in Liberia look promising; and Malawi has potentially large uranium deposits."
  - Some resource exporters are broadening commodity exports: "Ghana (oil), Sierra Leone (iron ore), and Tanzania (gas)."
  - Noted cross-regional observation: "it is likely that the bulk of exploitable natural resources remain to be revealed, because the identified level of such resources in SSA is currently far below that of other world regions."

### Policy implications and emphasis (overview from structure)
- Macroeconomic policy challenges (chapter headings preserved):
  - "Policy Challenge: Consume More Now or Later?"
  - "Policy Challenge: Ensuring External Sustainability"
  - "Policy Challenge: Coping with Price Volatility and Avoiding 'Boom and Bust Cycles'"
  - "Policy Challenge: Achieving the Appropriate Fiscal and Monetary Policy Mix and Avoiding Real Exchange Rate Appreciation"
- Fiscal and public finance emphases:
  - "Well-designed fiscal frameworks are the cornerstone of sound economic policies in resource-rich countries" (Chapter 4 focus).
  - Chapter 4 addresses: "Policy Challenge: Alleviating Capital and Credit Constraints While Maintaining Macroeconomic Stability and Fiscal Sustainability."
  - Chapter 5 focus: "Policy Challenge: 'Investing in Investing'" (public investment management).
  - Chapter 6 focuses on revenue mobilization: "Policy Challenge: Optimizing Tax Revenue" and "Policy Challenge: Strengthening Tax Administration."
  - Chapter 7 focuses on governance: "Policy Challenge: Establishing Credibility and Support for Institutional Change" and "Policy Challenge: Stronger Governance and Transparency."

### Key quantitative thresholds and counts (preserved verbatim)
- Resource-rich definition threshold: "one-fourth of total goods exports in 2005–10" and elsewhere "25 percent of total exports derived from natural resources."
- Region counts and shares:
  - "about 20 of the 45 countries in the region" are resource-rich.
  - "Seven of these countries are oil exporters."
  - "Of the 20 resource-rich countries, half are fiscally dependent" (half of 20 = 10 fiscally dependent).
  - Fiscal dependence definition: "resource revenue that exceeds 20 percent of total revenue."
- Calculations assumptions:
  - Discount rate used for NPV calculations: "4 percent."
  - IMF price projection handling: "The IMF’s World Economic Outlook provides projections for most resource prices and for these, a five-year average price for 2012–16 is used; for the other resource prices, the 2011 price is used."

*Italicized source attribution preserved as required: BOOM, BUST, OR PROSPERITY? MANAGING SUB-SAHARAN AFRICA’S NATURAL RESOURCE WEALTH (excerpts from Chapters 1–2).*

### Box 2.1. (concluded)

### Box 2.1. (concluded)

### Resource revenue dependence and future prospects
- Several countries (Ghana, Liberia, Mozambique, Niger, Tanzania, and Uganda) can anticipate sizable revenue inflows in the future, provided that appropriately structured tax policy frameworks are in place.  
- These estimates are based on currently known natural resources; the bulk of exploitable natural resources in SSA likely remain to be discovered.  
- The price outlook for commodities is very uncertain and the current high prices may not last, which would have adverse consequences for the value of wealth.

### Fiscal and social spending patterns in oil exporters
- Oil exporters in SSA spend considerably less as a share of GDP on public education and health than other countries:
  - Median expenditure ratio on public education and health in 2006–09 was 3 percent of GDP for oil exporters.
  - By comparison, median expenditure was more than 8 percent of GDP for middle-income countries.
  - For non-resource-rich low-income countries, the median was about 6 percent of GDP.
- Substantial cross-country variation exists within the oil exporter group:
  - Angola had considerably increased expenditures on health and education through 2009 to more than 8 percent of GDP, but expenditures have fallen off subsequently.
  - Consistent with increased expenditure through 2009, Angola’s human development index rose most rapidly among oil exporters during 2005–10.

### Sources of a resource curse in SSA
- Where a “resource curse” has occurred in SSA, prominent contributing factors include:
  - Weaknesses in natural resource and macroeconomic management.
  - Poor governance and rent seeking, with national politics oriented toward capturing rents from natural resource extraction, typically benefitting only a small group of elites or vested interests and leaving the masses largely excluded.
  - Weak forward and backward linkages from primary exports to the rest of the economy.
  - Upward pressure from surges in resource receipts on the nominal exchange rate and on prices, leading to broader loss of international competitiveness and reductions in manufacturing output and employment (the so-called Dutch disease).
  - Volatility in resource prices, leading to instability in macroeconomic aggregates and damaging boom-bust cycles.

### Recent performance and intersectoral linkages
- The sustained resource price boom since the middle of the first decade of the 2000s has contributed to an improvement in performance of resource exporters, but it is too early to tell whether this improvement will be maintained.
- Since 2000, real GDP per capita growth has, on average, been higher in resource exporters than in other SSA countries and higher still in the fiscally dependent subsample.
- The direct contribution of natural resource production to GDP growth varies markedly across countries, from being the dominant contributor in Equatorial Guinea and the DRC to more modest contributions in South Africa and Zambia.
- Deviations from trend of nonresource growth are highly correlated with annual variations in commodity prices, suggesting commodity prices have a strong positive effect on nonresource activities.
- Resource and nonresource growth are significantly positively correlated, indicating interlinkages such as more goods and services provided to the resource sector and demand effects from resource revenue.

### GDP versus GNI and distributional concerns
- GDP per capita can be a misleading measure of income accruing to nationals in resource-rich economies; gross national income (GNI) provides a somewhat different picture because natural resource extraction typically involves foreign-owned firms, capital, and skilled personnel, so a significant share of value accrues to foreigners rather than nationals.
- The disparity between GDP and GNI is relatively large for oil-producing countries, but much less noticeable in other resource exporters or non-resource-intensive economies.
- Although GNI per capita in SSA is, on average, higher in natural resource exporters than in nonresource exporters, this income advantage is typically not reflected in corresponding disparities on the Human Development Index (HDI) or international measures of welfare.
- Faster growth among natural resource exporters has been accompanied in some countries by larger improvements in some areas of health care (e.g., immunization), but:
  - Literacy and infant mortality rates are only slightly better among resource-rich countries.
  - School enrollment rates are considerably worse compared with nonresource economies.
- Aggregate cross-country comparisons should be interpreted cautiously because of high variability in income levels across groups, but averages help explain concerns about income inequality and lack of inclusive growth in resource-rich economies.

### Policy implications: Consume now versus later; investment and uncertainty
- Key policy challenge: deciding how much resource wealth to consume now versus later to balance present welfare gains with intergenerational equity.
- Classical consumption-smoothing recommendations (Friedman’s permanent income model) suggest a fixed or constant level of consumption over time set equal to the implicit return on the natural resource asset; the model accounts for exhaustibility and aims to maintain asset value for future generations.
- Limitations of the classical consumption approach for SSA:
  - It is severely restrictive and excludes a role for investment, leading to underinvestment in capital-scarce low-income, resource-rich countries.
  - Some resource windfall should be used upfront to increase the capital stock and raise growth potential.
  - The basic consumption-smoothing approach fails to address capital and credit constraints faced by many resource-rich SSA countries.
  - It does not reflect the reality that current generations may be poorer than future ones, implying higher marginal utility of consumption today.
  - It ignores uncertainty of wealth estimates: natural resource prices are volatile and production volumes uncertain; many reserves in SSA remain to be discovered, so likely estimates of natural resource wealth in many countries are far higher than current estimates suggest.

*Source: Box 2.1. (concluded), Boom, Bust, or Prosperity? Managing Sub-Saharan Africa’s Natural Resource Wealth, IMF African Department materials as provided.*

### Box 3.1. Procyclical Fiscal Policies and Boom-Bust Cycles in Sub–Saharan Africa

### Box 3.1. Procyclical Fiscal Policies and Boom-Bust Cycles in Sub–Saharan Africa

### Procyclicality and empirical findings
- Many resource exporters in SSA experienced strong boom-bust episodes associated with fluctuations in resource prices until the first decade of the 2000s; revenue surges were immediately spent, yielding large year-to-year changes in government expenditure.
- Arezki and Ismail (2010) find an asymmetric response of current and capital expenditure to changes in oil prices: current expenditure increases rapidly during booms and capital expenditure falls even more rapidly during busts.
- Thomas and Bayoumi (2009) find that the deterioration of the non-oil fiscal balance in response to changes in oil revenue in SSA countries is considerably larger than in other countries: on average, a 1 percentage point of GDP increase in oil revenue would reduce the non-oil fiscal balance by 0.41 percent of GDP.
- Country differences in sensitivity of government expenditure to oil revenue are substantial: government expenditure and oil revenue follow each other closely in the Republic of Congo, but the relationship is considerably weaker in Equatorial Guinea and Gabon (Figure 3.1.1).

### Investment vs consumption choices and country-specific priorities
- Once the choice between consumption and saving is made, policymakers must decide how to allocate savings between physical and financial assets.
- In capital-scarce countries the payoff of investments such as economic infrastructure can be large; a substantial share of resource revenue should generally be allocated to capital spending.
- Certain types of current expenditure complementary to capital spending—particularly spending on education and health—can yield high returns by building human capital.
- In resource-intensive and fragile SSA countries, public spending on security and justice sectors (for example, to strengthen private property rights) may have significant growth returns.
- The precise balance between capital and current spending must be made on a country-specific basis; Botswana is cited as an example that finances all of its investment spending from resource rents.

### Botswana: an illustrative case
- Botswana’s mineral-wealth management is based on a Sustainable Budget Index (SBI) principle: “non-investment” spending is financed only with nonresource revenue.
- Botswana has built a large stock of government savings in its Pula Fund, managed by the Bank of Botswana; the central bank’s official exchange reserves and the Pula Fund have helped limit the adverse effects of boom-bust commodity price cycles.
- Figures presented include comparisons of GDP per capita (1980 and 2010) across Botswana, Zambia, South Africa, and Sub-Saharan Africa excluding Nigeria and South Africa, and time series for resource revenue, gross fixed capital formation, the Pula Fund, terms of trade, and foreign exchange reserves (figures not reproduced here).

### Supply-side and absorptive-capacity constraints
- Supply-side bottlenecks and absorptive-capacity constraints influence the speed at which public investment can be increased.
- Sharp domestic investment increases may be warranted to prevent inflationary pressures and loss of competitiveness of the nonresource sector (Dutch disease).
- Absorptive constraints often reflect weak capacity to choose and implement productive projects, potentially yielding poor investment rates of return.
- When choosing between physical and financial investments, countries must account for these challenges and for the expected duration of a revenue surge.

### Ensuring external sustainability: benchmarking the nonresource current account
- A nonresource current account balance excludes resource export proceeds, investment income outflows associated with resource investments, and imports related to extraction; it approximates the current account that would prevail in the absence of the natural resource and measures long-term nonresource saving-investment balance once the resource is exhausted.
- The nonresource current account can be compared with the annual resource flow from the net present value of resource wealth and an assessment of a sustainable net asset position (example methodology: net present value-based annuity).
- Box 3.3 illustration for Nigeria:
  - The non-oil current account deficit is projected to decline to about 16 percent of non-oil GDP in the medium term, falling below the sustainable annual drawdown of wealth accruing to the government.
  - The sustainable annual drawdown in the example is defined using the net present value of wealth based on a 4 percent real rate of return, multiplied by the government ownership share and expressed as an annuity over a 40-year period so that the wealth is exhausted at the end of this period.
  - Basing the analysis on the current account excluding only oil exports (i.e., assuming companies finance oil-related imports themselves through retained earnings) also yields a current account concept that falls below the return on wealth for the whole economy in the medium term.
  - The assessment is sensitive to changes in resource prices and the level of the real rate of return; a significant fall in oil prices from 2013 levels would change the picture.

### Coping with price volatility and avoiding boom-bust cycles
- Natural resource prices are inherently volatile; volatility in resource revenue can also stem from sudden changes in production volumes.
- Procyclicality of government spending—higher spending associated with higher revenue—can further fuel macroeconomic volatility and is generally neither effective nor productive.
- Physical assets cannot be easily unwound to address sudden drops in resource revenue; volatility argues for caution when choosing between physical and financial asset investments.
- Establishing institutional mechanisms or rules to reduce adverse effects of volatile prices is essential.

### Two strategies to reduce volatility
- Hedging resource prices:
  - Example: Mexico’s government purchase of an option to sell oil at $70 a barrel, exercised in mid-2008 when the price fell to $40 barrel.
  - Hedging can secure a more stable revenue base but can be politically costly if it fails, and oil price forecasting pitfalls exist.
- Stabilization or resource funds:
  - When prices are high relative to an established benchmark, surplus resource proceeds flow into the fund and are invested in foreign assets; when prices are low, funds are withdrawn.
  - Difficulties in SSA include immediate expenditure needs and political resistance to building financial reserves; contemporaneous political incentives often favor spending current high revenues.
  - Policymakers should consider persistence and standard deviation of resource price, costs of changing expenditure across business cycle phases, and lending/borrowing fees.
  - Operational aim should be to stabilize expenditures, not resource revenue.
  - Most stabilization funds failed when designed on contingent revenue rules (i.e., inflows and outflows linked to a prespecified resource price or revenue target independent of the actual fiscal balance).

### Oil funds in selected developing countries (Timor-Leste and Nigeria)
- Timor-Leste Petroleum Fund:
  - Established in 2005 and governed by Petroleum Fund law.
  - The Ministry of Finance manages the fund; day-to-day operations are delegated to the central bank; an independent Investment Advisory Board validates investment decisions.
  - Acts as both a saving vehicle and a stabilization fund; overriding aim is to maintain its real value and prevent expenditure volatility.
  - Projected sustainable income is based on an estimated real return of 3 percent; transfers out of the fund in excess of this amount are subject to parliamentary oversight.
  - Since 2009 transfers have exceeded projected sustainable income due to a policy to front-load essential investment expenditure.
  - The Petroleum Fund invests only in external assets and is audited annually by internationally accredited auditors; adheres to the Santiago Principles.
  - As of end-December 2012, the fund value was about $11.8 billion, equivalent to nearly eight times the projected budgetary expenditure for 2012 and more than three times nominal GDP (about nine times non-oil GDP).
- Nigeria’s Excess Crude Account (ECA) and subsequent sovereign wealth fund (SWF):
  - ECA established in 2004; initially successful. During 2004–08 significant budgetary savings were guided by an oil reference price and saving surplus revenue.
  - By end-2008 the ECA had reached $20 billion; these resources were used to counter the 2008–09 financial crisis, allowing the consolidated government balance to swing from a surplus of 6 percent of GDP in 2008 to a deficit of 9 percent of GDP in 2009.
  - The ECA was subject to ad hoc withdrawals and weak legal framework; spending pressures resurged during rebound in oil prices, political uncertainty, and the election cycle.
  - By end-2011 the ECA was almost depleted; this motivated creation of a sovereign wealth fund operational since July 2012.
  - During 2012 revenue replenished the fund so that its value was $9.2 billion at end-2012.
  - The revamped SWF has three components: a stabilization fund, an infrastructure fund, and an intergenerational saving fund; stricter rules than under the previous ECA reduce the likelihood of sharp drawdowns, though modalities for determining allocations remain to be determined.

*Source: Box 3.1. Procyclical Fiscal Policies and Boom-Bust Cycles in Sub–Saharan Africa, from the provided IMF content unit.*

### Box 3.4. (concluded)

### Box 3.4. (concluded)

### Fiscal and Monetary Policy Mix: Scenarios and Risks
- Policy challenge: Achieving the appropriate fiscal and monetary policy mix and avoiding real exchange rate appreciation in resource-rich SSA economies.
- Policy scenarios described:
  - If the government saves all of the windfall gain from an increase in resource prices and the central bank keeps the foreign currency, the real exchange rate remains stable. In this case, there are no adverse implications for the real economy but nor are there benefits from higher public investment.
  - If reserves accumulated by the central bank are equal to the resource windfall from higher resource prices, the effects on domestic inflation and on the real exchange rate depend on whether the government spends its increased revenues and on whether the central bank sterilizes the increased demand for local currency by the government through open market operations. If the amount of sterilization matches the increased spending by government, the inflationary effects are muted.
  - If the government spends the increased revenue generated by higher resource prices and the central bank fails to accumulate reserves, the real exchange rate appreciation is magnified, with possible adverse consequences for the real economy.
- Private-sector behavior can offset prudent public-sector responses: private spending may be boosted following a hike in resource prices and may offset a prudent public sector stance (Ricardian equivalence concept).
- Empirical finding: Since 2000, SSA countries have had mixed success insulating the real exchange rate from resource price pressures. Gold exporters and “other” exporters avoided real exchange rate appreciation despite rapidly increasing resource prices, whereas oil exporters and copper and cobalt exporters (Zambia) saw the real exchange rate follow real export prices (period referenced: 2000–11).

### Fiscal Framework Objectives and Key Elements
- Fiscal frameworks for resource-rich countries should include:
  - Indicators to assess the fiscal stance in support of macrofiscal stability;
  - Rules that anchor the short- to medium-term fiscal policy path but offer sufficient flexibility to channel precautionary savings to urgent spending needs, in particular, for scaling up growth-enhancing expenditure;
  - An appropriate benchmark for assessing long-term fiscal sustainability; and
  - A strong institutional setup with adequate capacity to forecast revenue, manage expenditure, and set medium-term targets for fiscal policy.
- Design depends on country-specific factors: size and extraction profile of reserves, development level, credit constraints, demographic profile, absorptive and institutional capacity.
- Priority in most SSA resource-rich countries (where capital stock is deficient): balance macroeconomic stability concerns against economic development; permit flexibility to front-load growth-enhancing investments while maintaining macroeconomic stability.

### Short- and Medium-Term Fiscal Anchors: Options and Trade-offs
- Nonresource balance anchors:
  - Defined using the fiscal balance excluding net resource revenue.
  - Allow managing short-term demand fluctuations and insulate fiscal policy from revenue volatility.
  - Specific nonresource targets can be set taking absorptive capacity into account.
- Price-based rules or structural balance rules:
  - Seek to smooth fiscal effect from changes in resource revenue using a reference price (moving average of past or future resource prices).
  - Shortcoming: ignores exhaustibility of resource revenue and changes in production volumes (sustainability concerns can be partly addressed by cautious revenue projections).
- Expenditure growth limits:
  - Cap growth of government spending in nominal or real terms, or as a percentage of resource revenue.
  - Benefits: simplicity, ease of monitoring, relationship to absorptive capacity.
  - Disadvantage: may reduce incentives to mobilize nonresource revenue.
  - Can complement price-based or structural balance rules that do not account for changes in production volume.

### Guidance on Choosing Anchors by Resource Horizon
- Key guiding question: How long are resources likely to last?
- For countries with a short resource revenue horizon:
  - Risk of abrupt expenditure adjustment if policy focuses only on the overall fiscal balance.
  - Recommendation: complement conventional fiscal indicators with indicators that explicitly exclude resource revenue, notably the nonresource primary balance (overall primary balance excluding interest payments and net resource revenue), preferably scaled to nonresource GDP.
  - The nonresource primary balance is a better short- to medium-term anchor for countries with a short revenue horizon.
- For countries with a long resource horizon:
  - Primary concern: managing volatility and avoiding procyclical fiscal policies.
  - Recommendation: price-based rule (price smoothing) or structural primary balance indicator (use a reference price determined by formula or independent experts) to break the link between resource price cycles and spending.
  - Structural-type indicator can be combined with an expenditure growth rule or ceiling to guide pace of investment when facing capacity constraints.

### Long-Term Fiscal Sustainability and Alternative Frameworks
- Long-term fiscal sustainability: ability to sustain spending, tax levels, and policies without insolvency problems; especially relevant for countries with short resource horizons.
- The permanent income hypothesis is a useful framework but requires modification to allow scaling up of investment in the medium term followed by scaling down to preserve net financial wealth.
  - Modified permanent income model allows front-loading of growth-enhancing public investment but does not account for growth impacts or replacement and recurrent costs associated with additional investments.
- Alternative approaches:
  - Fiscal sustainability framework combined with a debt sustainability framework modified to account for growth impact from investment.
  - Alternative models that assume windfall resource revenue is primarily used for public investment; results sensitive to assumptions about efficiency and quality of investments.

*Source: Box 3.4. (concluded), _dp1302 - Box 3.4. (concluded).*

### Box 4.2. Chile’s Experience with Fiscal Rules

### Box 4.2. Chile’s Experience with Fiscal Rules

### Context and economic importance of copper
- Chile produces about one-third of the world’s copper.
- Copper accounted for 54 percent of Chile’s exports and nearly 14 percent of its fiscal revenue in 2012.
- Copper reserves have an expected duration of at least 50 years.
- Chile had annual real GDP growth averaging 5.3 percent during 1991–2011.
- Chile’s macroeconomic policy framework includes inflation targeting, a flexible exchange rate, and a fiscal rule.

### Design and objectives of the fiscal rule
- The fiscal rule was adopted in 2001 with two objectives:
  - (1) to contribute to fiscal and macroeconomic stability by insulating public spending from volatility in copper prices and economic activity, and
  - (2) to improve the net asset position of the central government.
- An annual structural balance target is set, initially at a surplus of 1 percent of GDP.
- In the design of the Chilean rule, intergenerational considerations do not play a prominent role.
- In 2006, the fiscal rule was anchored in the fiscal responsibility law that:
  - set guidelines for computing the structural balance, and
  - mandated that the administration must set such a target within 90 days of taking office.
- The formula for the structural balance essentially captures the difference between trend revenue consistent with trend estimates of output and copper price, and public expenditure.
- The difference between the overall fiscal balance and the structural balance is the cyclical component of both mining and nonmining revenue.
- Chile has extended the notion of a structural balance further, by also adjusting nonresource revenue to the economic cycle.

### Sovereign wealth funds and fiscal resource management
- The fiscal responsibility law established rules for managing fiscal resources and set up two sovereign wealth funds (SWFs):
  - Pension Reserve Fund (PRF)
    - Receives revenue of between 0.2 and 0.5 percent of GDP to be used to cover pension guarantees.
  - Economic and Social Stabilization Fund (ESSF)
    - Intended as a fiscal buffer, receiving any budget surplus left after payment to the PRF and debt amortization, and to be used to finance deficits at times of revenue shocks.
- The capital of both SWFs is invested abroad.

### Institutional features, transparency, and political backing
- The structural balance target has been adjusted several times since introduction to respond to changing economic circumstances but has remained a strong anchor for fiscal policies.
- The fiscal target, even before the legal framework was adopted, was well backed by strong political commitment.
- Features that shield the framework from political interference and ensure transparency include:
  - Estimates of potential GDP and long-run copper prices are determined by a group of independent experts.
  - Annual budget reports are published, including the targets for the next four years and a detailed review of implementation of the previous year’s budget relative to targets.

### Applicability and issues for other countries (notably SSA)
- Chile’s type of structural balance rule may be difficult to apply in many SSA countries where:
  - the economic growth cycle is not well defined, and
  - data shortages and capacity constraints make the estimation of potential output difficult.
- Such a rule might be considered in the future as data and information improve.

*Box 4.2. Chile’s Experience with Fiscal Rules — from the source content provided*

### Box 5.2.  Transforming Oil Assets into Capital Assets: Gabon

### Box 5.2.  Transforming Oil Assets into Capital Assets: Gabon

### Program overview
- In 2009 the Gabonese authorities launched an ambitious public investment program (PIM) amounting to US$12 billion, equivalent to more than 150 percent of non-oil GDP, over the next seven years.
- Program focus:
  - Improving the level and standard of economic infrastructure through road building.
  - Upgrading the port facilities.
  - Enhancing energy supply (hydroelectric and thermal power).
- Development objectives:
  - Support development of Gabon’s forestry sector, palm oil industry, and other sectors.
  - Create special enterprise zones to facilitate private-sector development.

### Institutional arrangements and technical support
- Recognition of weak administrative capacity in public investment management, especially at the appraisal stage (see Figure 5.2.1: Public Investment Management Index, 2010).
- A national agency for major public works was established to manage the program, with technical and personnel support from Bechtel, a private engineering corporation.
- Bechtel’s role and experience:
  - Has significant experience in Gabon, including assistance to authorities with planning and execution of the 2012 Africa Cup of Nations in Gabon.
  - Will guide the government’s public investment program during the next five years.
- Note on the Public Investment Management Index:
  - Index ranges from 0 (worst) to 4 (best).

### Implementation gaps and required actions
- Many key elements of a strong PIM system (as enumerated in Box 5.1) appear to have been put in place, but further actions are needed:
  - Ensure an independent review of the investment appraisal process (step 3).
  - Provide a clearer articulation of the program timeline and deliverables (step 5).
  - Transfer knowledge smoothly from Bechtel into local hands to ensure buildup of local managerial capacity and technical expertise.

### Key statistics and timelines
- US$12 billion total PIM.
- Equivalent to more than 150 percent of non-oil GDP.
- Time horizon stated: over the next seven years (from 2009).
- Bechtel engagement: guidance during the next five years.
- Reference year for Public Investment Management Index figure: 2010.
- Public Investment Management Index scale: 0 (worst) to 4 (best).

*Source: Box 5.2, “Transforming Oil Assets into Capital Assets: Gabon,” in the provided IMF chapter content.*

### Box 6.1.  Taxation of Extractive Industries: Mozambique

### Box 6.1.  Taxation of Extractive Industries: Mozambique

### Mozambique: resource context and macrofiscal implications
- Mozambique is endowed with coal, natural gas, mineral sands, hydropower-based electricity, and potentially oil.
- Four major natural resource projects (hydropower, coal, gas, heavy sands) are already in production; several more are in exploration or development (mainly hydropower and gas).
- Foreign direct investment (FDI) reached just over $5 billion in 2012, more than double the amount in 2011, with more than 80 percent of the increase in the mining and gas sectors.
- IMF staff estimates indicate:
  - The natural resource sector could contribute 2 percentage points of additional economic growth each year.
  - Its share could exceed 25 percent of GDP by end-2023 (from less than 7 percent in 2011).
- Natural resource revenue:
  - Accounted for less than 4 percent of total revenue in 2011.
  - Could rise sharply to about 40 percent of total revenue by 2023, depending on scale of development and regulatory framework.

### Steps taken on fiscal regime design
- With IMF and World Bank technical assistance, in 2007 the government designed and adopted a mining and petroleum fiscal regime that introduced model contracts.
- Best-practice features adopted included:
  - Introduction of a progressive system of taxation in the hydrocarbon sector.
  - Adoption of specific incentives for the mining and petroleum sectors, removing these activities from the scope of the more generous investment law.
- New legislation being prepared aims to bring into one place all key fiscal terms for future mining and petroleum projects, comprising three mechanisms:
  - a royalty to guarantee the government a minimum share of the value of production;
  - a corporate income tax with sector-specific rules (including ring fencing, depreciation rules, taxation of capital gains, and withholding tax rates);
  - a progressive mechanism (revised for petroleum) to ensure the government captures a higher share as projects become more profitable.
- Authorities aimed to finalize and submit the draft legislation to parliament in the first half of 2013; authorities are consulting with all interested stakeholders.

### Economic and negotiation tradeoffs in extractive industries
- Key characteristics affecting fiscal design:
  - Extractive industries require high, up-front immobile investments that at an early stage become sunk costs, creating a distinct shift in negotiating power to the benefit of the government and potentially discouraging investment.
  - Large involvement of multinational enterprises raises complex cross-border tax issues; central role for state-owned enterprises may lead to asymmetry of information, unclear responsibilities for taxes, and inefficiencies; limited number of actors may confer substantial market power to some producers and investors.
  - Exhaustibility of natural resources may be a concern at a project level because early extraction leads to less extraction later on.
- Fiscal regime design must balance maximizing government share of economic rents with providing adequate incentives for private investors, while tailoring regimes to country-specific circumstances (reliance on extractive revenue, exhaustibility, size/number of sites, state participation preferences, institutional/administrative capacity, governance standards).
- Timing and risk-sharing considerations:
  - In countries with limited credit market access or strong political pressure for quick results, governments may prefer to collect a larger share of revenue early in the project cycle.
  - Economic efficiency calls for more risk to be borne by the party better able to handle it (often the multinational investor); taxes should be less responsive to price changes so investors gain more when prices go up, but governments are protected when prices go down—this limited progressivity may conflict with governments’ desire for higher revenue when prices rise.

### Fiscal approaches and instruments
- Broad approaches:
  - Contractual schemes (production sharing or service contracts): extracting firm recovers costs by retaining some physical product and shares remaining product (profit) with government.
  - Tax or royalty systems plus licensing: firm obtains exclusive rights and pays taxes or royalties on profit.
  - State participation in extracting industries (can be fiscally equivalent to other approaches).
- Common fiscal tools explained:
  - Bonus payments (signature, discovery, production bonuses): single or staged lump-sum payments; once paid they constitute a sunk cost for the extracting enterprise.
  - Royalties on gross revenue:
    - Flat royalty provides revenue from start of production but may render projects financially unviable.
    - Sliding-scale royalty varies with price but does not vary with costs and may be subject to frequent adjustments.
  - Corporate income tax (CIT): ensures normal return on equity is taxed as in other sectors; variable income tax applies a higher tax rate as ratio of profits to gross revenue rises but may introduce distortions and debt bias.
  - State participation through equity: secures additional revenue and nonfiscal benefits (ownership, influence, knowledge transfer) but as minority shareholders governments may lack control over dividends versus reinvestment.
- Suggested regime for many developing countries (international experience):
  - Combine a modest royalty, the standard CIT, and a tax targeted explicitly to rents:
    - Royalty ensures some revenue whenever there is production.
    - CIT ensures return on equity is taxed at corporate level and enables foreign tax credits for extracting companies taxed on worldwide income.
    - Rent tax targets the specific revenue potential of extractive industries.

### FARI model: fiscal diagnostics and forecasting
- The Fiscal Analysis of Resource Industries (FARI) model:
  - Excel-based diagnostic tool developed by IMF staff to estimate government tax take under different regimes and model fiscal regimes throughout the project cycle.
  - Accounts for heterogeneity across projects and over time (different phases with different effective tax rates).
  - Helps estimate permanent income from resources and guide sustainability of fiscal policies and macroeconomic forecasting.
- Application example: Liberia
  - Used to project impact of iron ore extraction on growth, balance of payments, and revenue, and to guide mineral-concession negotiations.
  - Produces forecasts using project- and country-specific data on extraction rates, investment, and costs.
  - Shows effective tax revenue varies significantly across projects, reflecting heterogeneity of risk and government capacity.
  - Limitations: project-level data requirements may be difficult to obtain; results are sensitive to forecast errors on prices, phasing of investment, production costs, and export capacity.

### Policy challenge: strengthening tax administration and use of audit rights
- Tax administration issues for extractive industries in SSA:
  - Although resource extraction involves relatively few actors, many resource-rich developing countries perform poorly in administration: overly complex fiscal regimes, varying interpretation/abuse, and weak capacity for routine administrative functions (processing, reporting, payment enforcement).
  - Weak general administrative capacity undermines proper accounting for resource revenue; shared responsibility for tax collection among ministries, agencies, regulators, and SOEs blurs responsibility and poses coordination challenges.
  - Regulators and SOEs often lack habit of self-assessment and tax audit capacity; SOEs with both fiscal and commercial responsibilities present conflicts of interest.
- Strengthening tax administration requires:
  - Improving public financial management, staffing, and equipping general administration, and strong leadership.
  - Rationalization and reallocation of responsibilities (may face resistance from vested interests).
  - Ensuring transparency to strengthen accountability and good governance.
- Maximizing revenue via full use of audit rights:
  - Resource taxes are normally based on self-assessment; tax administrations must challenge declarations to detect mistakes or avoidance.
  - Fiscal and cost audits are the main tools for budget revenue; a fiscal audit checks compliance with laws and contractual requirements.
  - In many countries audit rights are underused or executed incompetently, sometimes resulting in large revenue losses.
- IMF technical assistance:
  - In 2010 the multidonor Managing Natural Resource Wealth–Topical Trust Fund (MNRW-TTF) was created to provide IMF technical assistance specifically to resource-rich low- and middle-income countries on fiscal regimes and revenue administration for extractive industries, macrofiscal policies and public financial management, asset and liabilities management, and statistics for natural resources.
  - Eight SSA countries have benefited from technical assistance financed by this trust fund; MNRW-TTF and bilateral support have effectively doubled financial resources available for technical assistance on extractive industry issues.

*Box 6.1. Taxation of Extractive Industries: Mozambique*

### Box 6.3. (concluded)

### Box 6.3. (concluded)

### Audit prerequisites and audit rights
- The cost audit is a prerequisite for the fiscal audit: overstating costs—deliberately or accidentally—means understating profits, and thus tax losses.
- The higher the marginal tax rates—and for excess-profits taxes they can be well over 50 percent—the greater the temptation for companies to overstate costs.
- Abusive transfer pricing is an insidious way of overstating costs.
- Audit rights are described in national legislation or contracts (or both). Usually a government can ask for any information it deems pertinent.
- Companies must keep all records on site, but only for a limited period; after that period, an audit is much more costly and cumbersome.
- Audit rights expire eventually; auditing of resource projects should start as early as during the exploration and development phases, when the greatest costs are incurred and may later be deducted from revenue.
- Companies have rights too: once the audit exercise has ended, even if it was poorly done, the audit rights will expire.

### Challenges in conducting audits
- Human resources:
  - A hard-nosed audit of a sophisticated, well-resourced, internationally operating company poses great challenges to developing country governments.
  - Skills and experience to match company specialists are hard to develop and retain.
  - Talented national staff may have comparative advantage in improving spending rather than matching international company expertise.
  - Outsourcing to specialized firms with solid international reputations is the logical solution; this approach is followed in Angola.
  - Outsourcing may appear expensive but can be highly cost effective given the revenue to be gained.
  - Revenue administration staff should be trained to organize outsourcing and to take up auditor opinions on underpayments or other contentious issues with resource companies.
  - Auditors should comply with the International Standards on Auditing (ISA).
- Poor governance:
  - Audits may be neglected as government agencies and companies collude.
  - Government departments may perform audits for which they are not qualified to collect associated fees, potentially encouraged by companies.
  - Transparency and involvement of parliament, civil society, and other stakeholders is crucial.
  - Governments could regularly publish an exhaustive accounting of how they used their natural resource auditing rights, and what results they achieved.

### Tax policy vulnerabilities and cross-border issues
- Corporate income tax competition:
  - A steady decline in CIT rates has been observed in most regions, suggesting increased tax competition owing to globalization.
  - Keen and Mansour (2009) show that this was also the case in SSA in 1980–2005, although by slightly less than in other regions.
  - Resource-rich countries may nonetheless face competition for managerial and technical skills and foreign investment in resource projects.
  - Tax competition and a “race to the bottom” can be moderated by international cooperation at a regional level (codes of conduct, treaties, or information exchange).
  - Recent example: common mining code developed in the West African Economic and Monetary Union.
- Erosion of withholding taxes by tax treaties:
  - Differential withholding taxes negotiated with different treaty partners may be exploited by investors seeking the lowest available rate among a host country’s treaties.
- Transfer pricing:
  - Transfer pricing is the pricing of goods or services provided between two related parties (e.g., a subsidiary and the company that owns it).
  - Abusive transfer pricing occurs when prices are misstated to shift profits to the party for which tax provisions are most advantageous.
  - This behavior may be difficult to detect and prevent, especially in countries with limited administrative capacity.
  - With useful pricing benchmarks for extractive industries and with transparency, the problem can be mitigated.
  - The Organisation for Economic Cooperation and Development has established a set of transfer pricing guidelines (OECD, 2010).
- Treatment of gains on the transfer of extraction rights:
  - The host country should gain from the sale of natural resource assets, but how to tax those gains and design the legal framework is less obvious.
  - Sale of an asset reflects the prospect of future rents; if those rents are adequately taxed, taxing the sale may amount to double taxation.
  - Countries have chosen different solutions: Norway charges taxes only on rent and not on gains from asset sales, whereas other countries do tax gains, often with very complex rules.
  - Once the issue of whether to tax the asset sale is settled, the question becomes who should levy the tax—often unclear when transactions involve nonresident companies.
  - Amounts involved can be considerable and politically charged.
- Double taxation and foreign tax credits:
  - Two options for taxing foreign-source income of residents:
    - worldwide or residence taxation (income earned abroad is taxed in the taxpayer’s country of residence; a tax credit may be given for taxes paid in the source country);
    - territorial taxation (revenue is taxed only in the source country).
  - Existence of both systems means companies operating in territorial-tax countries but resident in worldwide-tax-home countries may be subject to higher taxation in their home country or, absent tax credits, to double taxation.
  - Different types of double taxation treaties can play an important role in addressing these issues.

### Certification, transparency, and governance practices (Box 7.1 and related discussion)
- Republic of Congo oil revenue certification:
  - Oil revenue accounts for nearly 80 percent of the Republic of Congo’s total government revenue.
  - In response to weaknesses in oil management, Congolese authorities established a quarterly certifi cation process conducted by external auditors.
  - The certifi cation is a report by an independent audit firm hired by the government and published on the Internet; it is not an “audit” strictly speaking.
  - The process uses a monthly oil-revenue model with fiscal parameters from all of Congo’s production-sharing contracts, actual costs of oil production, and oil prices to generate a precise revenue stream owed to the government.
  - The auditor compares volume of oil owed to the government with the amount declared by oil companies and comments on discrepancies; identifies cash revenue that should accrue to the state treasury.
  - Certifi cation reports verify information against independent sources: bank and terminal operator statements, shipping documents, SNPC and private company information, treasury information, independent reports on shipments and storage, and international exchange rates—but cannot dissect all individual transactions.
  - The auditor reports differences that cannot be explained as “discrepancies.”
  - Effectiveness depends on competence and independence of the auditing firm, accuracy of information provided, and critically on the government’s active follow-up because oil contracts can change frequently.
- International support and best-practice codification:
  - IMF Guide on Resource Revenue Transparency (IMF, 2007b) is a major source for guidance and examples.
  - Natural Resource Charter (Natural Resource Charter, 2010) seeks to encapsulate best practice.
  - Technical assistance is provided in tax policies, contracts, regulation, public financial management, and asset management.
  - Peer support: Extractive Industries Transparency Initiative (EITI) had 37 resource-rich countries participating as of March 2013, including 20 from SSA.
  - Legislation to prevent abuse and publish payment records is becoming more extensive among resource-importing countries (example: U.S. Dodd-Frank Act).
- Country examples:
  - Liberia enshrined EITI commitment in law as it recovered from civil war.
  - Timor-Leste complemented early EITI compliance by adopting five transparency pillars (Box 7.2).

### Timor-Leste’s five principles for governance and transparency (Box 7.2)
- Adherence to Global Standards:
  - Full compliance with EITI revenue verification and participation requirements.
  - All receipts from taxes and royalties from oil extraction are transferred to the Timor-Leste Petroleum Fund.
  - Inflow of funds and consistency with company payments are monitored by a board with representatives from other countries, donors, extractive industry companies, civil society organizations, investors, and international organizations.
- Best Practice in Sovereign Wealth Management:
  - Ensured by rules governing the Petroleum Fund and the fiscal framework (see Box 3.4 in Chapter 3).
- Education and Information:
  - Fostered by broadcasting through radio and TV the 13-day parliamentary debate on the budget with ministers proposing and defending their budgets.
  - Noted context: about half of the population is illiterate.
- Accountability and Accessibility:
  - Timor-Leste Transparency Portal (www.transparency.gov.tl) is a gateway to four specialized portals focusing on budget, procurement, government results, and aid management.
- Communications and Good Governance:
  - Publication on the official government website of all decisions by the Council of Ministers within two days of weekly council meetings.

### Roles, responsibilities, and institutional arrangements
- Clarify legal framework establishing resource ownership and what powers different levels of government have to grant extraction rights, tax, and regulate.
- Recommended actions to limit abuse from unclear roles:
  - Procedures for awarding licenses and contracts should be open and nondiscretionary; all potential participants need full access to relevant technical information and knowledge of the tax regime.
  - Publishing draft contracts and awarding some tenders on single-variable bids are practices used in Angola and Nigeria.
  - Good practice calls for publishing all contracts (process followed in some periods by the Republic of Congo).
  - A national resource company with policy or regulatory roles should not also engage in commercial activities; separating responsibilities may minimize conflicts but convincing partners the privileged position is not abused is difficult.
  - Governments with equity stakes in the resource sector should explain how those stakes contribute to control, revenue maximization, and efficiency.
  - Any requirements placed on companies to carry out noncommercial activities for government without reimbursement should be clearly identified and explained in budget documentation to avoid obscuring spending priorities.

### Revenue collection, spending, and savings
- Pressures to spend resource revenue immediately and suspicions that the country is receiving less than it should will persist.
- Governments should carefully explain prudence regarding volatile and exhaustible resources and publish evidence that resource wealth is being fairly and effectively managed.
- The government fiscal framework should include a clearly defined role for resource revenue, recognizing exhaustibility and volatility, and institutional rules and structures that promote fiscal sustainability.

*IMF — Box 6.3 (concluded) and related sections from the PDF chapter.*

### Chapter 4. Clear statements of  the objectives and rules will help to protect

### Chapter 4. Clear statements of the objectives and rules will help to protect resource-derived wealth from pressures for short-term plundering.

### Transparency and Information Provision
- Special attention should be paid to tax administration and public fi nancial management systems because of the stresses induced by large and concentrated revenue streams.
- The government should produce regular reports showing all revenue associated with resource extraction and how the revenue has been collected and managed.
- To guard against theft of company tax and other payments before they have reached the treasury, participation in the EITI offers countries a useful structure for reconciling payments made and received.
- Mechanisms to invest and manage the proceeds from revenue extraction—whether in fi nancial assets (such as a sovereign wealth fund) or in physical investment (including public infrastructure)—should be subject to transparent operational rules that provide well-targeted managerial incentives and are fully integrated with fi scal policy.
- Full disclosure requires the following:
  - Release of in-depth information about all past resource-related transactions and balances, including debt (with any collateral), assets (funds or deposits and “wealth in the ground”), and quasi-fi scal activities.
  - Detailed reporting by national resource companies on their objectives, activities, governance, fi nances, relationships with the private sector, and contributions to government revenue.
  - Discussion of how expected future developments, including contingent liabilities and other risks, will support the government’s fi scal policy objectives and contribute to fi scal sustainability.
  - In-year reports to provide assurance that transparency is being maintained and to allow continued tracking of developments.
- Reports should include regular publication of data on mineral extraction, prices, and revenue payments (at least monthly in the case of hydrocarbon production). Nigeria’s national oil company publishes monthly production fi gures, albeit with some delay.
- Independently verified reconciliations of company resource revenue payments with government revenue receipts, preferably as recorded in budget documentation. EITI reports offer an ideal medium for reconciliation.
- Active dissemination of all such information through the Internet, press, TV, radio, and international publications. Fiscal information in Burkina Faso is widely promulgated.

### Oversight, Controls, and Auditing
- Without competent and honestly run public fi nancial management and tax administration systems, resource revenue will be plundered and wasted.
- Internal control and audit procedures provide a fi rst line of defense. They should cover all parts of the revenue chain, including national resource companies and asset management.
- Autonomous agencies, such as the Nigeria Economic and Financial Crimes Commission, can supplement internal audit work.
- Any scope for discretion by tax offi cials should be limited and clearly understood.
- External arrangements may supplement national independent oversight mechanisms (such as a national audit offi ce) which are often limited in capacity or autonomy.
  - International companies may be used to conduct independent fi nancial and effectiveness audits.
  - The EITI process provides an internationally recognized framework for reporting company revenue payments.
- Resource companies—including national resource companies—should follow internationally accepted accounting and auditing standards, including on publication.
- The home countries of many international resource companies also set anticorruption standards; reporting requirements on revenue payments are now also being legislated in the United States, through provisions in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, and in Europe.

### Box 7.3 — Extractive Industries Transparency Initiative (EITI)
- Some 20 countries in sub-Saharan Africa were participating in the EITI as of March 2013.
- Seven of these countries were, or will soon become, major oil producers.
- Remaining participating countries focus on metals, precious stones, or timber as sources of current or future natural resource revenue.
- The EITI provides a standardized methodology for compiling data on what governments say they receive from natural resource extraction and what extraction companies say they pay to governments.
- Regular country EITI reports explore apparent differences between government and company data and provide background information about the relevant extractive sectors.
- EITI participants are designated as either “candidate” or “compliant” countries. To achieve EITI compliance, countries must satisfy a validation mechanism that sets minimum standards for EITI reports including frequency, coverage, data verifi cation, and involvement of civil society.
- By March 2013, 11 countries in SSA had satisfi ed these requirements.
- EITI compliant countries in SSA (March 2013): Burkina Faso, the Central African Republic, the Republic of Congo, Ghana, Liberia, Mali, Mozambique, Niger, Nigeria, Tanzania, and Zambia.
- EITI candidate countries in SSA (March 2013): Cameroon, Chad, Côte d’Ivoire, the Democratic Republic of the Congo, Guinea, Madagascar, São Tomé and Príncipe, Sierra Leone, and Togo.
  - Note: Madagascar and Sierra Leone were temporarily suspended from candidate status pending “resolution of the current international situation” in Madagascar and “remedial actions to achieve compliance” in Sierra Leone.

### Policy Recommendations and Institutional Guidance
- Integrate mechanisms for investing and managing resource proceeds with fi scal policy under transparent operational rules to provide well-targeted managerial incentives.
- Produce and publicize regular, in-year, and comprehensive budget and sector reports to improve accountability and allow legislature, civil society, and the public to review contributions from the extractive sector.
- Strengthen tax administration and public fi nancial management systems to handle stresses induced by large and concentrated revenue inflows.
- Limit discretionary authority of tax offi cials and establish clear internal control, audit, and external verification procedures across the revenue chain.
- Use internationally recognized frameworks (EITI) and internationally accepted accounting and auditing standards for both national and international resource companies.
- Consider autonomous anti-corruption and investigative agencies to supplement financial controls.

### Key Statistics and Exact References from the Chapter
- “at least monthly in the case of hydrocarbon production.”
- “Some 20 countries in sub-Saharan Africa were participating in the EITI as of March 2013.”
- “Seven of these countries were, or will soon become, major oil producers.”
- “By March 2013, 11 countries in SSA had satisfi ed these requirements.”
- EITI compliant countries in SSA (March 2013): Burkina Faso, the Central African Republic, the Republic of Congo, Ghana, Liberia, Mali, Mozambique, Niger, Nigeria, Tanzania, and Zambia.
- EITI candidate countries in SSA (March 2013): Cameroon, Chad, Côte d’Ivoire, the Democratic Republic of the Congo, Guinea, Madagascar, São Tomé and Príncipe, Sierra Leone, and Togo.
- Legislative reference: “the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.”

*Chapter 4 excerpt from Boom, Bust, or Prosperity? Managing Sub-Saharan Africa’s Natural Resource Wealth.*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/dp/2013/_dp1302.pdf_