## IMF Survey: Resource-rich Countries Can Seize Opportunities, IMF

_IMF News, October 10, 2012_

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**Canonical URL:** [IMF Survey: Resource-rich Countries Can Seize Opportunities, IMF](https://www.imf.org/en/news/articles/2015/09/28/04/53/socar101012a)

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## Bibliographic details
- Published: October 10, 2012

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### Key findings on resource revenues and macroeconomic implications
- Revenues from extractive industries account for over half of government revenues in many petroleum-rich countries, and for over 20 percent in mining countries.
- About one-third of IMF member countries find, or could find, resource revenues critical to their economies’ macroeconomic stability—especially with large numbers of recent discoveries and planned oil, gas, and mining developments.
- Given the volatile nature of natural resource revenue, volatility of government expenditure is over 60 percent higher in these countries than in their comparators.
- Sound macroeconomic management of natural resources can contribute significantly to these countries’ economic development.

### Policy analysis and recommended frameworks
- The first step: creating the fiscal revenue from natural resources through well-designed and implemented fiscal regimes for natural resources.
- The next step: putting in place macroeconomic policy frameworks that ensure resource revenue is well-used and supports transforming subsoil assets into other productive assets.
- Revenue objectives are the main concern when designing fiscal regimes for the extractive industries, but trade-offs include:
  - Generating employment in related activities.
  - Addressing environmental impacts.
  - Capturing substantial rents—returns in excess of the minimum required by the investor—that make extractive industries attractive as a revenue source.
- Fiscal regimes vary greatly; the IMF works under tax and royalty, production sharing, or state participation frameworks—aiming for design efficiency in each case.
- Distinct characteristics of resource-rich developing countries—low per capita incomes, scarcity of domestic capital, and limited access to international capital markets—require distinct policies.

### Institutional priorities and policy responses to volatility
- Priorities to address policy framework gaps include:
  - Ensuring that fiscal policy frameworks and institutions lock in high rates of savings from resource revenues;
  - Strengthening overall institutions and building capacity to make good quality public investment; and
  - Delinking expenditure from volatile revenue in the short to medium term.
- The IMF recommends practical short-term fiscal rules (price-based, non-resource balance, or expenditure growth rules for example) to smooth revenue volatility for countries with relatively long reserve horizons.

### Tools, diagnostics, and implementation plans
- The study provides a framework for assessing the long-term sustainability of fiscal policies that accounts for depleting resource revenues and the growth and revenue-enhancing impact of public investment.
- A model-based “sustainable investment tool” is recommended to analyze the fiscal and macroeconomic implications of savings/investment scaling up scenarios.
- Fiscal indicators for inclusion in IMF country reports are proposed to measure how much of a nonrenewable resource is being consumed, and how much of it is being invested—intended to reorient policy discussions and aid communication with citizens.
- The paper offers a new tool to compare actual current account balances to optimal “norms” in these countries, complementary to other IMF methodologies for assessing external sustainability.
- Pilot studies will be conducted in a number of these countries to gauge how to adapt the new frameworks to country-specific circumstances, along with efforts to close information gaps and collaborate further with the World Bank.
- Practical guidance is provided, along with an excel template, for designing short-term fiscal rules.

### Institutional role and IMF engagement
- IMF policy advice and technical assistance in the field have expanded in recent years—driven by demand from the countries and supported by more donor financing.
- “These papers make an important contribution to the Fund’s policy toolkit to help resource-rich developing countries better realize the resource revenue potential, and soundly manage and use these revenues,” said IMF Deputy Managing Director Min Zhu.
- The IMF intends to focus bilateral surveillance and technical assistance in these economies on effectively managing natural resource wealth to support sustainable economic development.

*IMF Survey online — October 10, 2012*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [IMF Research](https://www.imf.org/en/news/search)
- [Designing fiscal regimes for natural resources](http://www.imf.org/external/pp/longres.aspx?id=4701)
- [Macroeconomic policy frameworks for developing countries](https://www.imf.org/external/pp/longres.aspx?id=4698)
- [Background on policy frameworks](https://www.imf.org/external/pp/longres.aspx?id=4699)
- [Macroeconomic policy framework applications](https://www.imf.org/external/pp/longres.aspx?id=4700)
- [Collier on natural resource wealth](https://www.imf.org/external/pubs/ft/survey/so/2011/INT092711B.htm)
- [Oil offers hope](http://www.imf.org/external/pubs/ft/survey/so/2010/INT021710A.htm)
- [Managing natural resources in Africa](http://www.imf.org/external/pubs/ft/survey/so/2012/POL033012A.htm)
- [first](https://www.imf.org/external/pp/longres.aspx?id=4701)
- [earlier work](https://www.imf.org/external/np/seminars/eng/2010/tax/090910.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar101012a_