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This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent, or the Agence Française de Développement. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

Some rights reserved 1 2 3 4 17 16 15 14 World Bank Studies are published to communicate the results of the Bank's work to the development community with the least possible delay. The manuscript of this paper therefore has not been prepared in accordance with the procedures appropriate to formally edited texts. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

For many Governments, their expectations of reaping a fair share of the high returns to the extractive industry over the last few years are not yet being realized. In light of likely continued good returns to the industry, at least in the medium-term, it is important for Governments to set up suitable arrangements, particularly in the fiscal arena. In order for them to do so, a number of conditions need to be met. First, there has to be an appreciation of the characteristics of the extractive industry and the Government's bargaining strength. Secondly, there must be fiscal policy coherence between Government institutions to underpin suitable fiscal arrangements. Thirdly, it is necessary to ensure the availability of skills necessary to formulate fiscal policies and appropriate negotiating strategies. A final requirement for countries and Governments is the capacity to administer and enforce more sophisticated forms of taxation and contractual arrangements. * The views expressed in this study are those of the author and do not necessarily reflect the views of the United Nations, its member States, or the institutions to which the author is affiliated.

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