Bérangère Maïa N. Parizeau, MAAPPS // Mar 6, 2015
The information in this blog entry is synthesized from the article “Implementing EITI at the Subnational Level,” published by the World Bank in October 2011. This comprehensive report analyzes subnational resource-revenue reporting for extractive industries in Ghana, Indonesia, Mongolia, Nigeria, the Democratic Republic of Congo and Peru. The emerging understanding of the report is that subnational level EITI resource-revenues reporting will need an appropriate operational framework to function properly and provide benefits to the Mongolian population. In this report, I will focus on key information about subnational reporting in Mongolia synthesized from this report.
The Mongolian public believes that EITI subnational reporting may help control the country’s rampant corruption. Civil society activism and Civil Society Organizations focusing on mining activities in Mongolia are mushrooming. This is very exciting for a more dynamic social accountability process. The government of Mongolia passed Resolution No. 272 in 2006, which legally binds companies in Mongolia to report directly to subnational government agencies. Subnational resource-revenue reporting in Mongolia is funded by multi-donor trust fund (MDTF ). In Yemen, local training for subnational resource-revenue reporting was also done by MDTF, and more specifically by the World Bank funds.
“According to an International Monetary Fund report (IMF 2007), there appears to be a trend toward stepping up the use of SNG revenue sharing.”1 pp.7
The issues of tracking and managing mining company off record donations to intergovernmental tiers in Mongolia is complex. It is an important aspect of the recent discrepancies in subnational resource-revenue reporting. These donations are the main source of revenue for producing areas in Mongolia. In-kind donations are not recorded through the banking system, and therefore not included in official subnational EITI reports. There is a problem with the EITI subnational regulatory frameworks which does not create incentives to report the total amount of donation due to a possible reduction in statutory transfers from the central government tax pool to subnational governments. This is an administrative problem that has the potential of being addressed effectively.
Donations may take the form of the construction of infrastructure projects, like hospitals and schools for example. Although donations are key sources of revenue for EI producing localities in Mongolia, these donations have no legal basis, they are voluntary. Another important dimension of resource-revenue reporting at the subnational level in Mongolia is monetary flow from exploitation licences. Furthermore, in Mongolia, large distances between mining localities and the lack of internet access facilities in remote regions slows down the process of subnational reporting which has to be done by post.
The subnational reporting of mineral royalties varies from country to country because each country operates under different conditions, a unique geopolitical landscape, legal system, and revenue-sharing formula. In Ghana and the Cajamarca region of Peru, subnational reporting of extractive activities is accompanied with governmental expenditures. In my opinion, subnational reporting should not only include governmental expenditure, but should also include the socio-economic and environmental impacts of the mining industry on the local population and the environment. Reporting in a transparent way on environmental concerns and issues of human rights appears to be dialectical considering the threats associated with climate change.
[1]https://eiti.org/files/ Implementing%20EITI%20at% 20subnational%20level.pdf