National Fund For Hydrocarbon Reserves (Mauritania)
Categories: Tax, International
The National Fund For Hydrocarbon Reserves is a fund that has been owned and run by Mauritania’s central bank, the Banque Centrale de Mauritanie, since 2006.
Mauritania is a country in Africa that decided to create this sovereign wealth fund (a state-owned reserve), funded by oil company revenues and taxes, to protect its future-self. It’s not uncommon for nations dependent on commodities to have volatile economies, dependent on the international supply and demand of the commodity.
To combat these ups and downs, nations like Mauritania set up state-owned funds, saving up when their main commodity is doing well in order to have money to spend when their main commodity is doing poorly. It's like if you’re a freelancer with some high-income months and low-income months, and you spend somewhere in the middle consistently (rather than living like a king one month and a peasant the next). For instance, Mauritania built up the fund from 2010 to 2013 when oil prices were high.
The thing about the National Fund For Hydrocarbon Reserves is that it’s not as transparent as most sovereign wealth funds.