GOXI

sharing in governance of extractive industries

Last year, we sent a detailed note to the IMF & others arguing that the way governments account for mineral receipts is facilitating the resource curse. Quite simply, it is treated as revenue, instead of being a capital receipt on the sale of an asset. We argued that this is exacerbated by the confusing and misleading terminology used to describe mineral receipts. And we asked for changes to (a) the System of National Accounts, 2008 (which defined GDP, National Savings, etc), (b) IMF's Government Finance Statistics Manual 2014, and (c) the standards issued by the IPSASB. We also sent this note to a bunch of other entities like the World Bank, UN, IPSASB, INTOSAI.

We received a comments from a number of people within IMF, IPSASB, and researchers as well. In general, commenters agreed that accounting for mineral receipts as a sale of assets is reasonable. Their principal concern is that we are being naïve and overstating the likely impact on altering political behaviour.

We've recently sent out a response, which provides some clear examples to illustrate the impact of the accounting. We also propose a specific Goa Foundation passive benchmark for evaluating natural resource management, with an example comparing the performance of resource rich countries during 2000-2008 reported in IMF's Fiscal Monitor : The Commodities Roller-Coaster.

We hope you would support our approach and proposals. Our campaign is titled "Whose mine is it anyway". We'd be happy to answer queries.

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Comment by Rahul Basu on September 16, 2017 at 13:35

I should add, in some recent discussions, the key difference between our approach and Green Accounting became clear. While green accounting looks at the nation (GDP, national savings) to change the discourse, we look at the government finances, in particular, revenue and the revenue deficit. 

Comment by Mulya Jules on September 16, 2017 at 13:24

Dear Rahul

I get your point and I've challenged a few academics in my country since I read about it in your reply to my post last month. It's politically expedient to accept the status quo...that perfectly suits the current global insatiable appetite for natural resources. As co-heirs of these assets with all preceding and future generations, we ought to think of natural resources on the lines of national museum treasures...each succeeding generation being only entitled to the revenues treasures housed in these national institutions generate and never allowed to sell them to private collectors and selfishly squander the proceeds on current wants and needs; as result greatly compromise the economic capacity of future generations.

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