revenues are more than 10 per cent below budgeted revenues. they could draw 60 per cent of the shortfall subject to a maximum. in order to avoid the excess or shortfall from being manipulated, the law specifically defines the basis on which “ budget revenues ” are to be projected, i. e. using an eleven - year projected price of oil and gas to be obtained from a defined independent source such as the imf or other independent sources. also there is the valid argument that a sustained decline in oil prices would trigger a depletion of the fund to sustain expenditures. the legislation seeks to deal with this eventuality by imposing a capital of us $ 1billion beyond which no drawings could be made. the intention is to adjust this capital over time. minister enill also spoke about the governance structure of the fund which is specified in law. this structure provides for four main actors : • parliament ; • the minister of finance ; • the board of the hsf ; and • the central bank. roles and responsibilities 1. parliament - has passed the enabling legislation that would continue to have oversight of the fund exercised through review of annual reports and audited financial statements. 2. 3. 4. minister of finance - advises the president on the appointment of the board in accordance with the legislation ; - makes deposits to hsf according to formula prescribed in the legislation ; - makes withdrawals from the hsf in accordance with the legislation. - annual reporting to the parliament. the board - is basically responsible for the arrangement of the fund but has delegated some of the functions to the central bank ; - within this context it will decide on the investment objectives and strategic asset allocation ; - reviews the performance of the hsf ; - reports quarterly and annually to the minister of finance ( who in turn will report to the parliament ). central bank - responsible for day - to - day management of the fund ( to meet investment objectives of the board ) ; - reports quarterly and annually to the board. the public also a role to play in the oversight of the fund. before expanding a bit on the nature of these responsibilities, let me clarify that currently the central bank has responsibility for the management of the country ’ s foreign exchange reserves. excluding the hsf, these reserves currently amount to us $ 5. 4 billion. but, there is a difference in the management philosophy underlying of the central bank reserves ( official reserves ) and the management of oil funds, like the hsf. the objective of central bank

of a central bank ’ s monetary policy. key lessons and policy initiatives substantial weaknesses in the functioning of financial institutions and markets were revealed by the episodes of turbulence, the high level of volatility and overshooting on a number of markets. the convergence of such diverse factors embodies the first “ real magnitude ” stresstest of today ’ s global financial system. in retrospect, the shock to the global financial system following the burst of the internet bubble was, all things considered, relatively modest. the challenge ahead lies in preventing the system from feeding on itself through a spiralling process of leveraging. financial complexity is an inevitable consequence of increasingly complex and global economic activity, and we must find ways of working out the necessary checks and balances. various streams of work co - ordinated at the eu level aim at strengthening the supervisory and financial stability arrangements – including the introduction of a european mandate to national supervisors, the clarification and strengthening of the functioning of the committees of supervisors at the level of the 27 nations, the wider use of colleges of supervisors to reinforce the supervision of cross - border banking groups and the approval of a memorandum of understanding on cross border cooperation in financial crisis situations between all relevant authorities in the eu ( namely supervisory authorities, central banks and finance ministries ). similar reflections have been launched in the us, for example let me mention the recent proposals issued by u. s. treasury secretary paulson to strengthen the us financial regulatory structure, and are being considered in other nations. equally or more importantly has been the agreement at an international level on the appropriate methodology to identify the common lessons on a co - ordinated basis on both sides of the atlantic as well as on both sides of the pacific. the present episode of turbulence is a global phenomenon, and thus only a global response can be effective. after the asian crisis, at the initiative of g7 finance ministers and central bank governors the financial stability forum ( fsf ) was created as the informal grouping where a synthetic diagnosis of the state of global finance could be carried out with a view to identifying the potential weaknesses affecting the international financial system and areas for improvement. the fsf “ report on enhancing market and institutional resilience ” recently presented to the international community – and in particular to the g7 and to the international monetary and financial committee of the international monetary fund – presents a number of policy recommendations to avoid the recurrence in the future of similar financial stresses. it is remarkable that we have a