“In many countries today, there are huge expectations from extractive revenues which can ultimately lead to overspending and debt among other things. Therefore it is important to have a law in place that manages these risks and challenges so as to meet the desired goals.”
This was said by Mark Evans, Africa Economic Analyst at Natural Resource Governance Institute during the Policy Forum breakfast debate held on the 31st of July 2015 at the British Council Auditorium entitled “The Oil and Gas Revenue Management Act: What does it mean for government spending?”
Mr. Evans said that in order to meet the target expectations it is crucial to ensure the adopted fiscal rules are implemented such as the recurrent expenditure growth being limited to nominal GDP growth and if revenues from oil and gas are greater than 3% of GDP, the funds should be kept in the Revenue Saving Account (RSA) of the Oil and Gas Fund and if the revenues fall below 3% of GDP the funds should be transferred to the budget (Budget Consolidated Fund).
Evans said that the government should ensure careful spending and saving of oil and gas revenues whereby 60% of spending should be on strategic development expenditure. He also emphasized on the transparency and accountability provisions which enhance compliance with the law.
Mr. Saruni, a representative from the Ministry of Finance who was the discussant at the event, asserted that these resources from extractives are exhaustible and if they are not handled well they may not benefit us or future generations. Therefore it was important to have a law in place that will manage them and he assured participants that the President of Tanzania was to soon sign the Oil and Gas Revenue Management Act to guarantee national benefits.
He ended by saying that the law demands transparency by requiring oil and gas companies to publish their financial reports quarterly and the same is to be audited and submitted to the parliament.
Soon thereafter, on the 4th August 2015 the President of Tanzania signed the Petroleum Act 2015, The Tanzania Extractive Industries (Transparency and Accountability) Act, 2015 as well as the Oil and Gas Revenues Management Act, 2015.