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Billions of Reasons to Improve Natural Resource Governance

 

September 27, 2017

Billions of dollars in revenue are lost by governments every year because of poor governance of natural resources contends Don Hubert, author of How to Lose a Billion. The report, published by Publish What You Pay Canada, provides a fascinating but sad overview of how companies in the extractives industry are able to avoid royalties and tax payments. Hubert and a panel of experts described many of the governance challenges faced by governments globally (my notes below) at a launch event yesterday at Oxfam America.

There were a number of takeaways for Public Financial Management professionals:

  • Extractives lifecycle of exploration, extraction and closing requires effective coordination among resources, revenue and finance ministries to coordinate royalties and tax collection
  • Multiple-year revenue implications should be modelled before agreeing to contracts, however most tools for modelling, like those from the IMF, tend be optimistic
  • Many developed countries suffer from poor resource contracts with companies and tax evasion
  • There are numerous contracting practices that governments should adopt
  • It’s all about strong accounting and audit
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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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