Prepared by Erik Offerdal.
Such a fund may have two objectives: to provide some short-term smoothing of petroleum revenues to the budget in a situation of volatile oil prices, and to provide some long-term consumption smoothing of petroleum revenues. To meet the first objective, the annual petroleum revenues absorbed by the budget would be calculated on the basis of a fairly constant benchmark oil price; any deviation of actual government revenues from this amount—depending on whether the actual oil price is above or below the benchmark—would be either channeled to or disbursed from the stabilization fund (to the budget). Under the World Bank’s SAL, approved in June 2000, the government is committed to establish an oil stabilization fund.
The methodology behind the calculations in the two charts is explained in Section D.
The calculation of trend output used here, out put, growth smoothed by a Hodrick-Prescott filter is quite sensitive to the choice of end-points in the data series; this could impact on both the capacity utilization and the fiscal impulse.
E.g., a substantial portion of petroleum revenues is earmarked for educational expenditures.
See Section IX for further discussion of the trade system.
Another probable source of distortions is the treatment for tax purposes of depreciation allowances in an inflationary environment, which would create a bias in investments between categories of capital with different lifetimes.
The current tax administration was established in 1998, and the customs administration in 1999. Significant efforts have been made within the new tax administration to prosecute corrupt officials and establish itself as a legitimate enforcement agency.
The government is currently planning to eliminate this tax by end-2000 in the context of a broader tax reform. However, the reporting requirements currently imposed on banks, which have become a useful tool in enforcement of other taxes, are to be retained.