Investor Presentaiton

Beyond the one-size-fits-all approach: Factors that influence the trade-offs between resource revenue management decisions Factors Degree of commodity dependence Savings rate to date Investment deficit Degree of resource exhausitibility and anticipated price fluctuations Institutional capacity to invest Degree of resource abundance per capita Explanation The more dependent a country is on a given commodity, the more urgent diversification becomes (e.g. Algeria, Angola, Saudi Arabia, Venezuela). Current savings rate contribute to the ability of the country to invest domestically as it is already “insured" in case of a commodity price collapse (e.g. Chile) Investment deficits (include low spending on human capital, education or R&D) increase the opportunity costs of resource revenue investments in financial assets overseas because funds would not be made available for domestic investment (e.g. Algeria, Botswana, Chile, Nigeria) If resources are to be depleted on the long term, or if their value is to decrease due to changes in consumer demand or technological innovations, the urgency to diversify sources of revenues through the transformation of domestic productive structures increases (e.g. fossil fuel dependent economies) A government's ability to spend revenues effectively is affected by the level of institutional development. The opportunity cost of investment in financial assets overseas are lower for very resource rich per capita countries (e.g. Kuwait, Qatar, UAE) than medium resource rich per capita countries (Algeria, Nigeria), where there is a need for employment generation outside of extractive sectors

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