While the sector accounts for a mere 3 per cent of total employment, as is shown in the slide, the sector accounts for 45 per cent of GDP; 91 per cent of merchandise exports and 62 per cent of fiscal revenues. Specifically, in respect of the budget, 43 per cent of every dollar of expenditure is financed by energy sector revenues.
Thus, let’s say oil and gas revenues decline by one-half, in the absence of a stabilization fund, expenditures would need to be reduced by 21 per cent. Sudden sharp reductions in government expenditures (of this magnitude) could have serious adverse effects on government programmes. (Particularly, in view of the lumpiness of government investment projects).