Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

tew (11.10.18) Planning & revenue management


Published on

tew (11.10.18) Planning & revenue management

Published in: Education
  • Be the first to comment

  • Be the first to like this

tew (11.10.18) Planning & revenue management

  1. 1. Planning and Revenue Management Energy Transparency Week Kyiv, October 2018
  2. 2.  Established in 2008 as a joint Center of Columbia Law School and the Earth Institute  Mission of CCSI: To develop and disseminate practical approaches and solutions to maximize the impact of international investment for sustainable development.  Foreign direct investment can contribute to sustainable development, through the transfer of capital and technology, job creation, linkages with local industries, infrastructure development and capacity building  Extent to which these benefits actually accrue to host countries depends heavily on the policies of the host country and the investors, and the institutions available to find mutually satisfactory outcomes for both. Columbia Center on Sustainable Investment (CCSI)
  3. 3. Outline*  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine * Many of the slides in this deck were originally developed by NRGI
  4. 4. Basic elements of resource-based development planning •Link plans and budgets in short and medium term •Measure the results of public investment programs and the impacts of EI investments •Anticipating revenue flows and expenditures over medium and long term •Define the needs and priorities for public sector investments over the long, medium and short term Development Plans Financial Modeling Transparent Budgeting Tools Monitoring and Evaluation Systems Vision Coordination Mechanism
  5. 5. Long-term strategic planningStrategic Development Plan (2011-2030) Main economic sectors need to feature in strategy
  6. 6. Concrete targets & timelines
  7. 7. Backed by $$ STAGE CHARACTERISTICS · Development of Macroeconomic/Fiscal Framework · Macroeconomic model that projects revenues and expenditure in the medium term (multi-year) · Development of Sectoral Programs · Agreement on sector objectives, outputs, and activities · Review and development of programs and sub- programs · Program cost estimation · Development of Sectoral Expenditure Frameworks · Analysis of inter- and intra-sectoral trade-offs · Consensus-building on strategic resource allocation · Definition of Sector Resource Allocations · Setting medium term sector budget ceilings (cabinet approval) · Preparation of Sectoral Budgets · Medium term sectoral programs based on budget ceilings · Final Political Approval · Presentation of budget estimates to cabinet and parliament for approval Medium Term Expenditure Frameworks Source: WB 2002
  8. 8. The SDG framework
  9. 9. Why using the SDG framework for planning Main characteristics of the 2030 Agenda: Ambitious: address everyone “No one left behind” Universal: Can be implemented in any country or region Multi-dimensional: Incorporates social, economic, and environmental issues, as well as good governance Holistic: Goals are interconnected and cover all the most pressing global challenges Constantly revised and expanded: Linked to mayor international agreements: Paris, New Urban Agenda, etc. Inclusive: Calls for the cooperation of non-state actors, especially the private sector and local governments Measurable: Provides a set of indicators and targets that can be easily adopted and adapted by any organization
  10. 10. Interaction of government strategies National Regional Provincial Municipal Sector plans Health Education Infrastructure Private sector development Timelines 20-30 years 5-8 years 3 years 1 year
  11. 11. Monitoring and evaluation
  12. 12.  Pre-existing governance constraints and development challenges  Asymmetry of information  Confidentiality  Threat of the “resource curse”  Volatility of revenues  Resources are non-renewable  Extractive projects can be treated as enclave sectors  Resettlement and land rights disputes  Potential environmental, social and health impacts, including for global warming  Historical records of human rights and environmental shortfalls  Highly politicized at times  Complex web of stakeholders with differing interests Extractive Industries and Sustainable Development: Special Challenges
  13. 13. Other considerations for Ukraine? Source: IPCC 2018 Source: UAEITI
  14. 14. Outline  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine
  15. 15. Are large capital inflows Are volatile and uncertain Are “free money” that are not directly tied to citizens Oil, gas and mineral revenues: Are finite 1 2 3 4 Results in specific challenges Macroeconomic management: Why treat oil, gas and mineral revenues differently? Short term Dutch disease and ‘absorptive capacity constraints’ Medium term Volatility Longer term Exhaustibility All Times Non-compliance with rules, lack of public accountability, and wasteful spending
  16. 16. Dutch disease Oil starts flowing ‘Tradeable’ industries grow less competitive and decline People and capital move from other sectors to the oil sector Value of domestic currency rises and/or inflation rises Inflow of foreign currency
  17. 17. Source: IMF (2011) PIMI Index – Indicator of government absorptive capacity Source: IMF, 2011
  18. 18. Policy options to address DD and absorptive capacity constraints  Sterilization: invest capital outside the country to reduce pressures on the currency or prices  Fiscal sterilization through SWFs  Monetary sterilization through monetary policies  Develop absorptive capacity through:  Building-up government’s administrative capacity  Addressing bottlenecks in the economy  Investment in education or skills development or import them
  19. 19. Timor-Leste Case Study: Largest budget increases in the world 89% 91% 84% 66% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2009 2010 2011 2012 Budget Actual Execution Source: Min Finance TL
  20. 20. Absorptive capacity of economy Source: Min Finance TL
  21. 21. Choices for managing a shortfall  Cut spending  Increase taxes  Borrow (foreign or domestic?)  Ask for IFI or bilateral aid  Draw down on government savings
  22. 22. Ratcheting effect of volatility: Over-borrowing (public sector) - 20,00 40,00 60,00 80,00 100,00 120,00 140,00 160,00 180,00 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 %ofGNI External Debt Algeria Nigeria Egypt, Arab Rep. Oil boom Fall in oil prices Debt relief and restructuring
  23. 23. Volatility Data: IMF
  24. 24. Terms of Trade shock + underdeveloped financial sector + pro-cyclical fiscal + pro-cyclical monetary policy Output volatility Lower growth + poor investment Summary: Costs of macroeconomic volatility
  25. 25. Budgetrevenueand expenditure 5 years Revenues “Smoothed” expenditures Surplus Deficit Fiscal policy to address volatility
  26. 26. Policy options to promote fiscal sustainability and intergenerational equity  Invest for economic growth and diversification  Expand the tax base  Save in financial assets for future generations  Pay down public debt
  27. 27. What is a fiscal rule? Definition: A permanent quantitative constraint on government finances How do they work?  Constrain spending in good years so the government can spend more in bad years  Stronger monitoring of government budgeting since there is a benchmark to measure against
  28. 28. 0 200 400 600 800 1000 1200 1400 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 MillionUSD Fiscal space Government oil income Fiscal space under bird-in-hand rule Fiscal space under PIH rule Fiscal space under an intermediate rule Developing a fiscal rule: How much to save and spend?
  29. 29. The Evidence: Why enact a fiscal rule?  Well designed rules are associated with more macroeconomic stability, smaller deficits, and less ‘pro-cyclicality’ → more investor confidence, better public investment planning, fewer debt crises and higher economic growth
  30. 30. Sources: IMF; own projections Variable More or less fiscal space Large ‘absorptive capacity’ High potential ‘absorptive capacity’ ‘Invest to invest’ Large domestic investment needs (high social rate of return on investments) Earmark for specific projects? High public debt Earmark for debt reduction? Fast depletion High expected rate of return on foreign investments Risk of environmental, economic or social crisis Theoretical determinants of the optimal fiscal space Fiscal rules can be: • Budget balance rule • Price-based revenue rule • Expenditure rule • Debt rule Long-term Fiscal Rules
  31. 31. Why create an extra-budgetary fund?  Manage saved fiscal surpluses or stabilize the budget  Secure source of funding for underfunded expenditure items  Depoliticize certain allocations and prevent budget cuts (e.g., pensions)  Circumvent poorly functioning budget institutions Avoid public scrutiny and PFM systems
  32. 32. Good Governance of SWF 1. Set clear fund objectives 2. Establish fiscal rules 3. Establish investment rules 4. Clarify good institutional structure 5. Require extensive disclosure and audit 6. Establish strong independent oversight
  33. 33. Saving for future generations Stabilization Sterilizing capital inflows Earmarking for specific expenditures Ring-fencing resource revenues What matters: clarity, consistent operational rules, adapted to the needs of the economy 1. Fund objectives
  34. 34. Outline  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine
  35. 35. What should be made transparent? Revenue Collection & Management Exploration & Extraction Company Disclosure Contracts Awarding Licenses
  36. 36.  Why important?  Helps understand what companies are paying and how much govt’s are receiving  Project-level revenue data: what should be made transparent?  Actual payments by companies  Revenues received by governments  Fiscal aspects: Taxes, Production Entitlements, Royalties, Dividends, Bonuses, License fees, etc.  Where can information be accessed?  Publicly available sources w/in country such as MoF, Central Bank, etc.  EITI reports  National disclosure laws, e.g. EU Directives Revenue collection
  37. 37.  Why important?  How revenues are managed in budget and allocated to budget, SOCs, NRFs, etc.  State Owned Companies (SOCs)  Play big role in revenue collection and allocation  Often lack transparency: operations/corporate structure, investments, sale information (prices, volumes, etc.).  Often have extra-budgetary autonomy, engage in “quasi-fiscal” activities.  Less oversight and accountability  Natural Resource Funds (NRFs)  Revenues often invested in foreign financial assets.  Big funds with huge impact on macro-economic stability and long-term development  Often managed outside of ordinary budget processes. Unclear how revenues invested & overseen  Sub-national distribution & information at the sub-national level Revenue management
  38. 38. Citizen Guides
  39. 39. A note on “free money”  Since oil and mineral revenues are “free money” for politicians and they reinforce authoritarianism, popular oversight may be less effective than in non-resource-rich states  Other types of compliance mechanisms become particularly important, such as:  Legislated operational rules  Effective management structure within ministry/agency  Internal audit  Independent external formal oversight  Consensus building
  40. 40. External oversight: Parliament, judiciary, external auditor and auditor-general  Meetings with parliament  Alberta (Canada)  Ghana  Mongolia  Judiciary  Timor-Leste  External auditor  Alaska (USA)  Chile  Norway  Auditor-General  Botswana  Trinidad & Tobago
  41. 41. Outline  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine
  42. 42. Discussion Questions  Are local governments entitled to a portion of oil, gas or mineral revenues? Why or why not?  What factors should determine how much resource revenue a local government receives?
  43. 43. Reasons for sub-national redistribution 1. Recognize local claims:  Particularly in cases where the same ethnic group occupied the land before the contemporary state was established  Codified in the constitution: Argentina, Colombia, Malaysia 2. Compensate for negative impacts:  Environmental externalities, loss of livelihood, cost of living increases, increase pressure on public services due to immigration  E.g. Ecuador, California 3. Promote economic development in poor regions  Where resource rich regions are poorer - E.g. Kazakhstan, Indonesia.  Transfers to poorest regions regardless if they are producing - E.g. Mongolia, Bolivia. 4. Mitigate violent conflict  Resources often concentrated in one region and source of conflict – sharing revenues can encourage dialogue  E.g. Bolivia, Iraq, Kazakhstan, Mongolia, Nigeria, PNG
  44. 44. Benefit sharing in extractive industries Source: NRGI & UNDP 2016
  45. 45. Diverse systems  Deconcentration: National govt. appoints sub-national positions  National govt. decides how revenues are spent  Decentralization: Sub- national positions are elected  More common to also collect resource revenues Source: NRGI 2015
  46. 46. How do countries treat resource revenues? Source: NRGI & UNDP 2016 E.g. Algeria, Chile, Myanmar, Norway Most countries (E.g. Canada, Angola, Ghana) E.g. Ecuador, Mongolia, Uganda
  47. 47. How much is transferred?  Centralized systems tend to transfer less to the sub-national level  E.g. Algeria, Ghana  Fiscally decentralized systems transfer more  E.g. Bolivia, Indonesia, Peru  Federal states tend to also collect more revenues  E.g. Australia, Canada, US Source: NRGI & UNDP 2016
  48. 48. Derivation based system: Indonesia Petroleum Revenue Central Government Treasury Revenue Sharing for Local Governments (15.5% of o.r.) Central Government (84.5% of oil revenue) Producing District (6% + 0.2% to education budget) Province (3% + 0.1% to education budget) Other Districts in the same Province (6% + 0.2% to education budget) Central Government Budget District Treasury Source: Revenue Watch How to determine who is ‘affected’?
  49. 49. How to avoid inequality? Derivation based system: Peru Source: Aresti 2016 CR= Canon Minero & Royalties GT = Government transfers (non-resource)
  50. 50. Indicator based system: Mongolia Redistribution formula (equal weighting): 1. Local development index (65 indicators) 2. Population 3. Geographic characteristics (density, remoteness) 4. Tax generating capacity Source: NRGI & UNDP 2016
  51. 51. To whom is money transferred?  Producing regions: E.g. Philippines, Uganda  Adjacent to producing regions: E.g. Brazil, Indonesia  Due to environmental impacts  Due to migration  Private or communal/customary landowners: E.g. Ghana, PNG, USA  Quasi- or fully independent subnational institutions: E.g. Niger Delta, Kyrgyzstan
  52. 52. Earmarking of revenues  By expenditure items, sectors or agency:  E.g. Bolivia, Brazil, Colombia, Papua New Guinea and Peru  Bolivia: 70% on health insurance, 30% on pensions  PNG: 30% must be saved for future generations; 30% on health, education and social payments, & rest can be cash.  Colombia: 100% of royalties spent in ‘high priority projects’  Conditional grants:  E.g. Venezuela can invest in registered projects (conservation to maintenance, improvements, infrastructure, health and education  Performance-based grants:  Received if attain targets (e.g. school attendance), but in conflict with derivation system  Require project approval prior spending (e.g. Peru)
  53. 53. Ill-designed systems can exacerbate problems  Potential for resource curse at the local level:  Evidence from Brazil, Colombia & Peru suggests that regions which were allocated significant resource revenues did not perform better than those that did not in terms of economic growth, health, education and housing outcomes.  Increase in conflicts:  Evidence from Peru suggests that violent conflicts increased during the latest resource boom in order for local leaders to receive jurisdiction over mine sites and thereby receive more transfers.  Once a redistribution system is setup and significant revenues flow, interests get entrenched and it becomes more difficult to change the system
  54. 54. Is the problem redistribution and/or social accountability? Social accountability based on 3 key principles:  Transparency: Availability and accessibility of information regarding rules, regulations and decisions  Accountability: Actors in power take responsibility for their actions  Participation: Of citizens in the decision making beyond voting’  Rigorous  High quality  Gender sensitive  Have an impact on outcomes
  55. 55. Social accountability in revenue management and allocation Problem: Limited uptake by local community voices in determining local budget allocations Solutions: Build capacity of local governments to engage citizens, promote participatory budgeting, create outreach activities to communities Madagascar example: Larger fiscal transfers were allocated to communities in the push to increase decentralisation in the 2000’s. Participatory budgeting was prioritized: 1. Establishment of project monitoring committees for elected community members to closely monitor the timelines and quality of work undertaken by the local government 2. Disclosure of budget information through information boards outside of city hall 3. Hosting of Accountability Meetings, forums where community members could express grievances and the mayor could respond to them. Source: World Bank (2016)
  56. 56.  Problem: Lack of consensus on what “sustainable development” means  Solutions: Open consultations with various actors in the community, use participatory decision making, promote a multi-stakeholder approach  Madagascar example: In the community of Anosy government, communities, civil society and private companies came together to determine what sustainable development means. Social accountability to help build consensus on earmarking revenues Source: World Bank (2016)
  57. 57. Outline  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine
  58. 58. Determining vertical distribution  Administrative capacity to to collect and manage revenues  Some taxes easier to manage than others (e.g. license fee vs. incomes tax)  Willingness of central government to distribute revenues  Size of administrative unit to absorb windfalls  Align to responsibilities to ensure efficient spending  Whom is responsible for health, education, infrastructure spending?
  59. 59. Determining horizontal distribution Source: NRGI & UNDP 2016
  60. 60. Horizontal vs. vertical distribution Vertical  Simpler to explain  Easier to calculate  Beneficial for producing regions  Prone to boom-bust cycles  Not linked to needs or responsibilities  Can increase inequality  May lead to conflicts due to definition challenge Horizontal  Address poverty & negative impacts of extraction  Data more difficult to obtain and subject to manipulation  Can depoliticize revenue sharing  Complexity can make them non- transparent
  61. 61. Determining what revenues to share  Royalty and property taxes more common to be shared than profit taxes and dividends  Profit taxes more difficult to calculate and trace back to individual projects  Profit taxes more volatile  Profit taxes back-loaded  Off-shore vs. on-shore projects  Less common to share off- shore projects:  Fewer direct negative impacts  Less susceptible for conflict forgoing or reducing another tax that provided funds for the administration of the national health plan, doctors might view it very negatively. The types of taxes that governments typically impose on mines are listed in Table 1 along with an indication as to whether that type of tax is amenable to being assessed at the national, provincial or local level. This determination is strictly subjective and in assessing the fit in any specific country, the resulting determination might vary considerably depending on factors such as the size and sophistication of various sub- levels of government. A brief rationale for the author's subjective determination is provided in the text following the table. Table 1. Fiscal Methods and Their Amenability to Fiscal Decentralization Y - Yes, well suited; P - possibly suited; N - not a good fit Tax type National Govt Provincial Govt Local Govt Income or profits based tax Y P N Import duty Y N N Export duty Y N N Royalty (profit based type) Y P N Royalty (ad valorem type) Y Y P Royalty tax (unit type) Y Y Y Royalty tax collected nationally and % distributed Y Y Y Licensing fees Y Y Y Surface rental or land use fees Y Y Y Withholding taxes on loan interest, dividends, services Y N N VAT on goods and services Y P N Sales & excise tax Y P P Stamp duty Y Y Y Property tax (on book or assessed value) Y Y Y Payroll based taxes Y P N Surtaxes Y Y Y User fees Y Y Y 4.1 Income or profits based tax In most nations, this is the major form of tax used to generate revenue for the national government. In setting up an income based tax system two elements are involved: setting the tax rate, and setting the rules for determining the taxable income Source: Otto (2001) Amenability of taxes to decentralization
  62. 62. Determining recipients  Allocation at a higher sub-national level may reduce potential for conflict:  More likely to cover all affected communities  Reduces the potential number of boundary issues  Recipients should be determined based on:  The objective of redistribution: Whom is responsible for service delivery or environmental mitigation?  Capacity to manage resources: generally, the lower the level of administration, the lower the capacity  At the lower level could consider community development funds, but such system comes with its own challenges (more on this topic later)
  63. 63. Address revenue volatility & dependence  Save in boom years (Abu Dhabi, Alabama, Alberta, Northwest Territories, Wyoming, Bojonegoro)  Allow for sub-national borrowing (Bolivia, Nigeria, Peru)  Central Govt. smoothes transfers (Canada)  Indicator-based formula that is counter-cyclical  Fiscal rules  Reduce resource dependence  Earmark to invest in infrastructure, human capital & diversification Source: NRGI 2016
  64. 64. Mandate transparency  Required to improve spending efficiency and reduce the risk of corruption  Derivation-based system: Project-by-project and by payment type information + formula  Indicator-based system: Data depends on the formula upon which allocation is made  EITI standard requires members to disclose sub-national transfers Source: NRGI & UNDP 2016
  65. 65. Setup oversight mechanisms  Separate accounts can hinder monitoring  Government mechanisms that regular reviews the system & its effectiveness (Canada, Nigeria, Indonesia)  In Canada national and provincial ministers meet every 5 years  Formal independent mechanisms (Australia, India)  In Australia the independent Commonwealth Grants Commission calculates the horizontal redistributions and makes recommendations and submits recommendations to the Ministry of Finance  Composition: Presidential nominees, Ministry of Finance, Regional first ministers or treasurers, Experts
  66. 66. Support long term planning & investing
  67. 67. Outline  Resource based development planning  Resource sustainability and fiscal tools  Transparency and accountability  Experiences of sub-national redistribution systems  Designing a sub-national redistribution system  Applying findings to the case of Ukraine
  68. 68. Group exercise 1. National revenue management system  Problems with current system?  Why/why not treat extractive revenues differently?  Potential for Dutch Disease?  Creation of fiscal rules and/or separate fund(s)? Why?  How should state owned companies be treated?  Earmark expenditures? 2. Sub-national revenue redistribution system  Problems with current system?  Why/why not redistribute extractive revenues?  Objectives of redistribution?  Criteria on how to redistribute?  Oversight mechanisms?  Does your proposal address the current problems? You are the trusted advisors to the president on extractive industry issues and need to present your proposed revenue management and redistribution system to a skeptical cabinet. You can use the below questions as guidance to your arguments.
  69. 69. Budget contribution of extractive industries EITI Report of Ukraine 2016 Table 5-31: Revenues of the Consolidated budget and Pension Fund from extractive industries of Ukraine in 2016 Extractive industry Payments from extractive industries, mln UAH Share in total revenues of the Consolidated budget and Pension Fund, %140 Mining of coal 8,188.11 0.9% Extraction of crude oil and natural gas 81,280.03 9.1% Mining of iron ores 5,920.18 0.7% Mining of titanium ores 882.46 0.1% Mining of manganeseores 398.22 0.04% Transportation of oil and natural gas 8,294.47 0.9% Total 104,963.46 11.8% Contribution to capital investments Capital investments in the Ukrainian mining industry in 2016 amounted to UAH 22.5 bln141, or 6.3%of total capital investment in Ukraine. The main share (42.9%) of this amount was directedSource: EITI 2016
  70. 70. Future revenues from extractives? Source: EITI 2016 produce 40% strand 60% Gas Source: CCSI equitable stranding model estimates Strand 98% Produce 2% Coal RESERVES IN LINE WITH PARIS AGREEMENT
  71. 71. Debt sustainability analysis  Public and external debt at around 85 and 130 percent of GDP, respectively, remain very high for an emerging market economy.  The external Debt Sustainability Analysis (DSA) continues pointing to significant solvency concerns as external debt stood at 129 percent of GDP in 2016, with the historical scenario showing unsustainable dynamics. Source: IMF Article IV (2017)
  72. 72. Revenue by region Source: EITI 2016
  73. 73. Average salary by region (2013) Source of data: State Statistics Service of Ukraine
  74. 74. Transportation routes Ukrtransgaz PJSC being the operator of the trunk gas pipeline system, transported natural gas to the EU, the Balkan countries and Turkey in 2016. The inflow and outflow of natural gas through the individual border gas measuring stations in 2016 is presented below (Figure 5-29). Figure 5-29:Inflowsandoutflowsof natural gasthroughtheindividual border gasmeasuring stations Include pipeline tariffs in redistribution mechanism? Source: EITI 2016
  75. 75. Comparing budgets (2016 data) Kovolivka: ₴8 200 000 DTEK Naftogaz (first 8 months 2018): ₴ 61 500 000 ≈ ₴ 92 250 000 (year) 1% (₴18 450 000) = 225% of budget Budgets Payments 2% (₴36 900 000) = 21%of budget 2% (₴36 900 000) = 5%of budget
  76. 76. Key takeaways
  77. 77. Planning and revenue management  Define long-term development objectives and the role that extractive industries can and should play to achieve these  Good management of extractive industry resources is a means to an end, not an end in itself  Required decarbonization of the world economy likely to fundamentally shift demand of extractive industries  Ensure that revenues from the extractive industry sector do not destabilize the economy in the short/medium term  Transparency and inclusive consensus building is key
  78. 78. Sub-national redistribution system  No ‘best practice’ or ‘on-size fits all'  Fiscal transfers should be linked to expenditure responsibilities  To reduce conflict and ensure stability, any specific allocation regime for oil, gas or mineral revenues should serve one or several nationally-agreed objectives  Transparency and inclusive consensus building is key  Choosing between government and separate fund structures depends on objectives and existing system
  79. 79. Consensus building 1. Transform political debate into a technical discussion  Explain trade-offs  Discuss objectives 2. Share knowledge  Only if stakeholders are well-informed can consensus be reached  Secrecy leads to mistrust 3. Identify stakeholders  Central, provincial, municipal government; impacted communities; civil society; companies; 4. Once agree on revenue management and/or sharing formula, codify it in legislation
  80. 80. Thank you! @nmaennling