## Today’s Bounty, Tomorrow’s Promise: Better Policies to Manage Natural Resources

_IMF Blog, December 15, 2010_

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## Bibliographic details
- Authors: Leslie Lipschitz
- Published: December 15, 2010

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### Overview
- Author: Leslie Lipschitz
- Date: December 15, 2010
- Central observation: Countries rich in natural resources—typically oil, gas or minerals—have, on average, performed less well than comparable non-resource rich countries.
- Core policy question: How to manage the economic and social challenges that stem from resource wealth and prevent “nature’s bounty” from “becoming the curse of the common people”?

### High-Level Seminar in Algiers — scope and participants
- Organized by: IMF Institute, in cooperation with the Bank of Algeria.
- Timing: early November.
- Purpose: Focus on challenges faced by countries with new natural resource discoveries and distill lessons from countries that have managed natural resources successfully.
- Participants: senior officials, experts from academia, civil society organizations, and representatives from countries including Botswana, Chile, Mexico, Norway, Ghana, and Uganda; also included the point of view of a major global petroleum company and various technical experts.

### Common themes and substantive findings
- Contract negotiations with multinational extraction firms:
  - Governments face difficulties negotiating exploration cost sharing and profit distribution.
  - Governments seek to retain a fair share of profits domestically; companies seek assurance of a fair return on initial exploration and discovery investments.
  - Technical experts and industry representatives discussed contractual structures to handle contingencies.
- Intergenerational sharing of benefits:
  - Key question: How should benefits be allocated between current and future generations?
  - Trade-offs highlighted: urgent poverty-alleviation needs versus longer-term investment strategies.
  - Political fortitude and robust institutions are often necessary to prevent domestic spending from exceeding absorptive capacity.
- Governance and institutions:
  - No single universally applicable solution; however, successful cases share good governance underpinned by robust and transparent institutions.
- Macroeconomic environment:
  - A stable and predictable macroeconomic environment is necessary to capitalize on resource wealth.
  - IMF advice was sought on designing fiscal policies, monetary and exchange rate policies to cushion revenue volatility, and the efficacy of ‘industrial policies’ (for example, trade policies or budgetary subsidies).

### Policy recommendations and IMF engagement
- Ongoing consultative dialogue:
  - Emphasized need for an ongoing, inclusive consultative dialogue that includes civil society and adopts a collaborative approach.
- IMF’s two broad fronts of engagement:
  - Technical assistance in areas such as:
    - Tax and expenditure policies.
    - Monetary policies under alternative exchange rate regimes.
    - Use and management of sovereign wealth funds.
  - Training opportunities:
    - IMF Institute launched a new two-week course on “Macroeconomic Management in Resource Rich Countries” at Stellenbosch University in South Africa following the Algiers Seminar.
    - The course aims to give a broad overview of topics and challenges in policymaking and strategic planning for resource-rich countries.
    - Next year the course will be offered again—to different regional audiences at the Joint Vienna Institute in Austria and the Joint Partnership for Africa in Tunisia.

### Conclusions and outlook
- The seminar provided rich, varied discussion but did not identify a quick fix to long-standing resource management challenges.
- The IMF aims to continue stimulating policymakers’ thinking by sharing complexities and successful examples and committing to technical assistance and training to support better policy design and institutional capacity.

*Source: Today’s Bounty, Tomorrow’s Promise: Better Policies to Manage Natural Resources — Leslie Lipschitz, December 15, 2010*

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## References

- [High Level Seminar on Natural Resources](http://www.imf.org/external/np/seminars/eng/2010/afrfin/index.htm)

_Source: https://www.imf.org/en/blogs/articles/2010/12/15/policies-to-manage-natural-resources_