| While an abundance of natural resources can handicap an economy, oil-based sovereign wealth funds can turn a finite resource into a sustainable financial tool. “Having large reserves of oil and gas presents an economy with considerable opportunities over the short- and long-term”, read a government-sponsored proposal for a Scottish oil fund. This was a statement that came in the lead-up to last year’s in/out referendum and one that saw the Scottish Government roll out plans to establish two oil funds and make good on any surplus tax receipts derived from North Sea oil and gas.
The first of the two funds would offset any sudden price swings and stabilise what could otherwise prove a potentially volatile revenue stream, according to the Fiscal Commission Working Group. This stabilisation fund, “into which higher than forecast oil and gas revenues are deposited, would minimise North Sea revenue volatility from changes in oil prices”, according to the Scottish Government Finance Secretary John Swinney......................................Full Article: Source
|