Reference

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. Transparency is therefore of crucial importance. The report by Revenue Watch Institute (RWI) provides support for contracts between governments and mining companies to be made transparent.

The case is made by RWI that contract transparency is critical for improved resource management and contract stability as well as a precondition for the even distribution of benefits from the extractive sector. Transparency in contracts provides a strong incentive for government not to make bad deals due to incompetence or corruption and strengthens their bargaining position. For citizens it allows a better understanding of the nature of the agreements and the information to hold government to account. In turn, companies benefit from greater confidence in the stability of contracts.

However, there is often resistance to contract transparency from mining companies, citing the importance of commercially sensitive information. This is paradoxically combined with a practice of often sharing contracts among competitors in large contracts and relatively unrestricted internal dissemination. Resistance is also found in government as secrecy also hides mismanagement, incompetence and corruption. However, it does so only from the public and not the resource industry which gets to know the practices of government. 

 

Access the report here.

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. Transparency is a crucial first step. Civil society has a key role to play in using information made public for monitoring government revenue from natural resources.

 The report examines how best practices in budget work can be applied to monitoring government revenue from extractive industries. It is found that there is a large degree of overlap in the two areas and collaboration can be beneficial for both. In supporting such collaboration the report identifies a number of factors which determine the success of budget and revenue work. These include:

    - Analysis through demanding access to information and developing other sources of information.

    - Building and maintaining advocacy coalitions provides added political support and allows technical aspects of budget work to be linked with grassroots participation.

     - Effective media work allows groups to raise public awareness, influence politicians and retain some degree of control over government monopoly on information.

      - Dealing with public officials by engaging and pushing them towards civil society’s agenda.

 Access the report here.

March 25, 2013

Precept 2 states that successful natural resource management requires government accountability to an informed public. In turn, an informed public requires greater transparency in the natural resource sector. The chapter by Karl provides support for the importance of transparency as a first step in overcoming the resource curse.

Karl begins with the premise that the resource curse is essentially a political not an economic problem, therefore also requiring a political solution. Addressing this problem requires a ‘big push’ with the objective of establishing a ‘fiscal social contract’ between state and society through transparency. Without an incentive to impose direct taxation, oil-states are not required to enter into a revenue bargain with their citizens and therefore face reduced pressure for accountability and transparency. The author identifies three types of ‘stateness’ deficits, which remove any form of fiscal accountability:

     - Information deficit as a result of an absent tax bureaucracy and the general opacity of the industry.

     - Monitoring deficit originating from not having a revenue incentive to comply with or develop regulations for economic producers.

     - Participation deficit particularly due to a lack of connection between state and its subjects.

Sequence is highly important in combating the resource curse. Addressing the information deficit through improved transparency is a first step, which sets the framework for improved monitoring, whilst both monitoring and information create incentives for the participation of those adversely affected by petroleum exploitation (p. 278).

Access the article here.

June 20, 2012

Precept 2 states that successful natural resource management requires government accountability to an informed public. In turn, an informed public requires greater transparency in the natural resource sector. One major benefit is that development agencies, commercial lenders and credit agencies have an interest in transparency, leading to improved access to concessional and commercial finance for government. The paper provides evidence for this claim.

The paper by Glennerster and Shin begins with the premise that transparency can improve accountability and undermine special interests, and thereby lead to enhanced policies and institutions. This is examined through using data on an IMF transparency initiative whereby governments were given the option of making IMF reports publicly available. These reports contained detailed assessments of the country’s economic institutions, prospects and policies. The authors proceeded to test whether the release of these reports resulted in lower borrowing costs in sovereign bond markets (an indicator of the markets perception of economic conditions). The authors find that:

     - Countries which decided to publish the Article IV reports had their credit spread fall by 11percent on average.

     - There is a diminishing marginal benefit to transparency. This means, countries that are less transparent when transparency reforms are initiated have the most to gain from doing so.

     - Countries with smaller, less liquid, debt markets benefit particularly from increased transparency.

 The authors conclude by noting that whilst the paper focused upon a specific transparency initiative, the reforms are, in effect, merely government changing its disclosure policy. Thus, the results can possibly have wider applicability.

 

September 9, 2010
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