Regional Development Fund

Government and Congress are on tenterhooks to territorial entities producing oil and other natural resources not renewable, and looking forward to those not producers, following the discussion of the draft legislative act fully amending the regime constitutional and legal royalties in our country, creating the General system of royalties and giving rise to the birth of four funds (Fund of savings and stabilizationadministered by the Banco de la Republica, consisting on the one hand of the total value of resources from the royalties and compensation, which will have as a general objective to absorb fluctuations in the value of the same, with the aim of reducing volatility in income beneficiaries; Regional competitiveness Fund, managed by the national Government, the Regional compensation fund and the Regional Development Fund, the latter two which constitute a mechanism of equality between the territorial of the country and its purpose entities is the financing of regional development projects. The distribution of its resources will be done based on the criteria of poverty, efficiency, population and regional equity). The project also has the deletion of the disputed royalties National Fund. Available also the initiative constitutional resources of the General system of royalties will not part from the General budget of the nation, nor of the participations General system, and spending that is carried out with the resources of the system, will be scheduled and run in a way that points to the Central of the explanatory statement thesis law are: 1-that in producing regions there are corruption and bad management of the resource; 2 there is no equity in the distribution of the resource; and 3 – that we must have a proper policy of saving aligned to the fiscal rule before the upcoming bonanza. Indeed, the draft says that: an appropriate intervention of the economic authorities during periods of strong growth in revenues that, should ensure the principle of equity in the distribution of the wealth extracted from the subsoil in three dimensions: first, generate savings for times of scarcity, promote the counter-cyclical nature of economic policy, and keep spending stable through time.

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