Study on National Revenue Funds: Their efficacy for fiscal stability and inter-generational equity

De-linking government expenditure from revenue in natural resource-rich countries has been widely seen as critical for prudent management natural resource revenues, and the National revenue funds (NRFs) are a viable mechanism to do so, reports a study conducted by Samuel Asfaha, Programme Officer of the Trade for Development Programme at the South Centre on the behalf of IISD, Canada.

In this study, Mr. Asfaha explains that in countries where the political-economic incentives that governments face does not foster prudent revenue management, NRFs should not be used to impose optimal expenditure paths. In such countries, NRFs should instead be used as policy tools for re-aligning the diverging interests of governments, influential groups and society at large, and nation-wide multi-stakeholder consultations are the way to go about it. He argues that the recent advancements in democratization in several countries and increased internal and external pressures are among the reasons why multi-stakeholder consultations on resource management are feasible. Further, the nation-wide multi-stakeholder consultations may pave the way for revisiting earmarked distribution patterns.

Any multi-stakeholder consultation should target three important issues: establishing a national revenue management law which is acceptable to all stakeholders; establishing a multi-stakeholder independent oversight and monitoring committee to ensure checks-and-balances and compliance with the national revenue law; and giving the law constitutional status, to protect it from amendment or override by a single entity.

The complete study is available at:
http://www.iisd.org/pdf/2007/trade_price_nat_rev_funds.pdf