Technical Notes and Manuals

Fiscal Analysis of Resource Industries: (FARI Methodology)

By Oana Luca, Diego Mesa Puyo

February 24, 2016

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Oana Luca, and Diego Mesa Puyo. Fiscal Analysis of Resource Industries: (FARI Methodology), (USA: International Monetary Fund, 2016) accessed November 8, 2024

Disclaimer: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This manual introduces key concepts and methodology used by the Fiscal Affairs Department (FAD) in its fiscal analysis of resource industries (FARI) framework. Proper evaluation of fiscal regimes for extractive industries (EI) requires economic and financial analysis at the project level, and FARI is an analytical tool that allows such fiscal regime design and evaluation. The FARI framework has been primarily used in FAD’s advisory work on fiscal regime design: it supports calibration of fiscal parameters, sensitivity analysis, and international comparisons. In parallel to that, FARI has also evolved into a revenue forecasting tool, allowing IMF economists and government officials to estimate the composition and timing of expected revenue streams from the EI sector, analyze revenue management issues (including quantification of fiscal rules), and better integrate the EI sector in the country macroeconomic frameworks. Looking forward, the model presents a useful tool for revenue administration practitioners, allowing them to compare actual, realized revenues with model results in tax gap analysis.

Subject: Commodities, Corporate income tax, Currencies, Discount rates, Financial services, Fiscal Analysis of Resource Industries (FARI), Money, Oil, Resource rent tax, Revenue performance assessment, Taxes

Keywords: Africa, Capital expenditure, Cash flows, Corporate income tax, Cost of capital, Currencies, Discount rate, Discount rates, Fiscal Analysis of Resource Industries (FARI), Fiscal regime design, Income tax, Internal rate of return, Mining taxation, Oil, Payback period, Petroleum taxation, Profit petroleum, Project net cash flows, TNM, Withholding tax

Publication Details

  • Pages:

    52

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Technical Notes and Manuals No. 2016/001

  • Stock No:

    TNMEA2016001

  • ISBN:

    9781513575117

  • ISSN:

    2075-8669

Notes

FARI Model

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