What is the Revenue Regulation Fund

The Revenue Regulation Fund is a sovereign wealth fund for the nation of Algeria.

BREAKING DOWN Revenue Regulation Fund

The REvenu Regulation Fund originates from surplus revenues gained from taxes on the development of Algeria's hydrocarbons, primarily its oil and gas reserves. Sovereign wealth funds, in general, are a way for the country with the resource to engage in the global market. According to the Sovereign Wealth Fund Institute, the Revenue Regulation Fund has approximately $54.8 billion in assets under management as of 2009. The Revenue Regulation Fund is often abbreviated RRF and has assets within the fund as the Algerian Dinar, abbreviated as the DZD. The Revenue Regulation Fund of Algeria is Africa’s second largest sovereign wealth fund, falling just behind the Libyan Investment Fund, which was established in 2006 and is also funded primarily out of hydrocarbons.

The Revenue Regulation Fund was established in 2000 primarily to act as a stabilization fund to lessen the impact that volatility in oil and gas prices have on the Government of Algeria. The Revenue Regulation Fund is a secretive organization and little information can be found as to its governance, holdings or investment strategies.

Limitations of the Revenue Regulation Fund

The Brown Capital Management Africa Forum noted that the last two twenty years have sparked a high rise of interest in state-sponsored investment funds like the RRF. State-sponsored investment funds are spurred on by either high commodity prices or large foreign exchange reserves with growth led primary from exports. Although some of the investment funds are from countries that are still developing, some are wealthy and well established and have existed for a long time. Many of Africa’s many sovereign wealth funds, however, are still somewhat new and thus, volatile, as they continue to grow and evolve.

According to the Embassy of Algeria to the United States, as of December 2016, the Finance Minister Hadji Babaammi announced the funds in the Revenue Regulation Fund had reached as high as DZD 840 billion. However, within that number, there was a blocked fund amount of DZD 740 billion, because that amount is the mandatory minimum balance that the fund needs in order to operate. Outside of the minimum balance, the remaining DZD 98 billion were generated from 2016 oil taxes. In a 2014 budget regulation before the Committee on Finance and Budget at the People's National Assembly (Lower House), the minister explained that the surplus funds would be used to cover the deficit in 2017.