The perfect balance

For most governments, hedging oil price risks on the financial markets is not impossible. But it is politically difficult. Most find instead opt for establishing ‘rainy day’ stabilisation funds. By Maria Kielmas

One of the most accepted assumptions in policymaker circles over the past decade has been that a government enjoying a growing dependence on oil revenues should establish a stabilisation fund. Using the positive examples provided by Norway and the US state of Alaska, the reasoning has been that such a fund may be used to stabilise national budgets and protect them from oil price volatility, as well as being invested over the long term to provide a return for future generations. With the