Natural Resource Funds

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The collective assets of the 23 Natural Resource Funds (NRFs) covered by the Index totaled over $2 trillion in 2012.[i] These funds can serve as important tools to manage revenue volatility, balance near-term expenditures with long-term savings, and utilize resource revenues to generate sustainable economic development. However, governance risks are high since NRF financial flows can bypass the regular budget process or become vehicles for patronage and discretionary allocations.


Figure 1: Natural Resource Funds: ranking and scores

Note: The table below (Figure 2) provides the name of each NRF assessed by the Index. For more detail, go to the RGI Data Tool

NRF performance varies significantly (see Figure 1). The top five performing funds, which hail from a highly diverse group of countries, provide comprehensive and timely reports on their transactions and assets, follow legally mandated deposit and expenditure rules, perform audits, and are subject to legislative oversight. Norway's Government Pension Fund receives the highest score. The Norwegian legislature has played a central role throughout this fund's history, from the establishment of the Petroleum Fund in 1990, approving rules for the accumulation and investment of assets, to the legislation that updated its mandate and management in 2006, turning the Petroleum Fund into the Government Pension Fund Global. As the fund went through these changes, it published regular, comprehensive reports and observed high standards for oversight and control.

In contrast, many other countries lack good Fund governance standards, including in the following three key areas. The first is a basic failure to publish comprehensive reports on their natural resource funds: eight of the 23 funds reviewed publish no information whatsoever on their assets (assets which external sources estimate to total $539 billion), transactions and investments.[ii] In Kuwait, for instance, it is against the law to disclose information about the Investment Authority to the public.

The second is the absence of rules approved by the legislature for the management of natural resource funds. This gap is often compounded by a failure to publish the Fund's operating rules, as observed in 10 out of 23 countries. In 2011 Angola approved legislation to establish for its reserve fund clear goals and structure, under management by the central bank; however, the government continues to deny requests for information about the legislation. Equatorial Guinea and Libya publish no information at all about their funds' accounts, and Index researchers were unable to find any information on the rules which cover their deposits or disbursements.[iii]

The third is the lack of legislative oversight of expenditures: in 15 countries, spending from the funds bypasses legislative approval. In Azerbaijan, the State Oil Fund (SOFAZ), which directly collects oil and gas revenue, finances “strategic projects” and circumvents the normal parliamentary budget process. In Kazakhstan, the rules for deposits into the fund are ad hoc and change every year, and the oil fund is not audited by independent auditors nor are audited reports published. Moreover, key decisions are made by presidential decree.

Figure 2: Natural resource funds assessed in the index

Country Fund Date of creation Resource Assets ($ billion) 2009 Assets ($ billion) 2012
Algeria Fonds de Régulation des Recettes 2000 Oil 55 56.7
Angola Fundo de Reserva do Tesouro Nacional 2004 Oil 0.2 5.0
Azerbaijan SOFAZ 1999 Oil 13 32.7
Bahrain Future Generations Reserve Fund 2006 Oil 14 n.a.
Botswana Pula Fund 1994 Diamonds & Minerals 6 6.9
Canada Alberta Heritage Savings Trust Fund 1976 Oil 14 15.9
Chile Social and Economic Stabilization Fund /Pension Reserve Fund 2006 Copper 18 20.4
Equatorial Guinea Fund for Future Generations 2008 Oil 0.03 0.08
Gabon Fond pour les Générations Futures 1998/2012 Oil 0.4 0.4
Iran National Development Fund of Iran (Oil Stabilization Fund) 1999/2011 Oil & Gas 13 40.0
Kazakhstan National Fund 2000 Oil 33 61.8
Kuwait Kuwait Investment Authority 1953 Oil 203 296.0
Libya Libyan Investment Authority 1981/2006 Oil 70 65.0
Malaysia National Trust Fund 1988 Oil 1.8 1.8
Mexico Oil Income Stabilization Fund 2002 Oil 6 6.0
Nigeria Sovereign Investment Authority/Excess Crude Oil Account 2011, 2004 Oil 11 1.0
Norway Government Pension fund 1990 Oil 432 656.2
Qatar Qatar Investment Authority 2005 Oil 70 115.0
Russia Oil Stabilization Fund (Reserve Fund)/National Welfare Fund 2004, 2004 Oil 185 149.7
Saudi Arabia SAMA Foreign Holdings 1971 Oil n.a. 532.8
Timor-Leste Petroleum Fund 2005 Oil & Gas 4.8 10.2
Trinidad and Tobago Heritage and Stabilisation Fund 2007 Oil 2.9 2.9
Venezuela National Development Fund (FONDEN) 2005 Oil 16 30.2
All estimate of assets provided by E. Truman for 2009 and SWFI for 2012, except for Malaysia, and Venezuela that are RWI estimates for 2012. Nominal terms.

[i] Given the diversity of natural resource funds, the RGI evaluates funds or entities only when they share four characteristics: they are owned by the government; accumulate revenue from mineral commodities (from transfers of fiscal surpluses, export earnings and/or directly from resource payments); invest in foreign assets; and are intended to save for future generations, stabilize mineral revenue, mitigate the negative effects of capital inflows or safeguard public funds. Our definition closely follows that of a sovereign wealth fund agreed by the International Working Group on Sovereign Wealth Funds. Compare to the definition provided by the International Working Group at: In addition to the 23 natural resource funds, we identify five funds, located in Australia (Western Australia-Future Fund), Colombia (Fondo de Ahorro y Estabilización Petrolera), Ghana (Stabilization and Heritage Funds), Papua New Guinea (PNG Sovereign Wealth Fund) and Sudan (Oil fund), which were created recently (in 2011 and 2012) and could not be assessed. We also noted changes to the structure or rules of existing funds in Gabon and Nigeria over the last year. Finally, in the country questionnaires, we provide information (without scores) about six special funds used to transfer revenue from mineral payments to local development programs in Guinea (Fonds d'Investissement Minier and Fonds de Développement Economique Local, Liberia (Mineral Development Fund), Mongolia (Human Development Fund), Peru (Social Funds), Sierra Leone (Mineral Development Fund), and the US (American Indian Tribes & Allottees, the Historic Preservation Fund, the Land & Water Conservation Fund, and the Reclamation Fund). Our indicators follow the Generally Accepted Principles and Practices for Sovereign Wealth Funds or Santiago Principles. See Santiago Principles here:

[ii] In Algeria, Angola, Equatorial Guinea, Gabon, Kuwait, Libya, Nigeria and Qatar, fund assets are estimated by external sources since this information is not available from the funds themselves.

[iii] The absence of rules and reporting is particularly troubling in these countries which have evidence of past oil revenue misappropriation. In the case of Libya, the World Bank’s Stolen Asset Recovery Initiative reports at least US$416 million that may belong to the former leader of Libya or to the government. See: In the case of Equatorial Guinea, there are currently three investigations into high-level corruption tied to Equatorial Guinea’s natural resource wealth. The US Department of Justice opened a case seeking to seize assets tied to the son of the President, “Teodoro Nguema Obiang Mangue, known as Teodorín, alleging that he had obtained hundreds of millions of dollars through corruption. Other corruption and money-laundering investigations implicating Teodorín or other officials are ongoing in France and Spain.” See Human Rights Watch News: