Primer: Revenue Management and Distribution

Sustainable economic development cannot come from merely extracting a resource. Authorities must invest revenues so that current and future generations enjoy the bounty.

KEY MESSAGES

• Oil, gas and mineral revenues are special because they are finite, volatile and, if large enough, can negatively impact other industries. They also generate large economic rents and are location-specific, which can lead to conflict over their control. As a result, they may need to be managed and distributed differently from other types of government revenue.
• There are various techniques governments can employ to respond to the special challenges of natural resource revenues, including distributing revenues to natural resource funds, state-owned enterprises, subnational jurisdictions, the national budget, or directly to citizens in the form of cash. Each of these institutions requires a unique management strategy.
• Large and volatile capital inflows also have special implications for monetary policy. It may need to be adjusted to control inflation, exchange rate appreciation or macroeconomic volatility.