Many countries use extra-budgetary funds to manage their natural resource revenues. In fact, all but a handful of large oil producers have established a natural resource-financed special fund. Together, these funds manage trillions of dollars in resource revenues annually.
In some cases, these funds are merely accounts within the state treasury, created for political purposes to demonstrate a commitment to financing a certain expenditure item (e.g. education) or for accounting purposes. For example, Mongolia’s petroleum- and mineral-financed General Local Development Fund, which allocates money to subnational governments, is simply a government account. In other cases, they are institutions that are subject to different rules than the rest of the government’s financial transactions, such as in the case of the Libyan Investment Authority. They may even have their own staff and legal standing.
Sovereign wealth funds (SWFs) are but one type of extra-budgetary fund. The International Forum on Sovereign Wealth Funds defines them as government-owned entities, established for a macroeconomic purpose, which do not have liabilities and invest at least partly in foreign assets. As of 2017, there were approximately 60 SWFs financed by oil, gas or mineral revenues or by fiscal surpluses in countries dependent on natural resources. Eight of the 10 largest natural resource-financed funds are held by governments in the MENA region....
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