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Economy of Pelaxia: Difference between revisions
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As of 2028, government spending is about 55% of the Gross Domestic Product of Pelaxia. | As of 2028, government spending is about 55% of the Gross Domestic Product of Pelaxia. | ||
The roots of the socialist movement in Pelaxia were based on dangerous working conditions, exploitative labor relations policies, and the demand for collective bargaining. As socialism became part of the mainstream labor movement, it also became part of the mainstream political discourse leading up to the proliferation of a plural Marxist political rhetoric that has benefited from the general absence of charismatic leaders. The state has large ownership positions in key industrial sectors, such as the strategic petroleum sector ( | The roots of the socialist movement in Pelaxia were based on dangerous working conditions, exploitative labor relations policies, and the demand for collective bargaining. As socialism became part of the mainstream labor movement, it also became part of the mainstream political discourse leading up to the proliferation of a plural Marxist political rhetoric that has benefited from the general absence of charismatic leaders. The state has large ownership positions in key industrial sectors, such as the strategic petroleum sector (PETROPEL), hydroelectric energy production (PalmHydro), wind energy production(StatoVentus), and telecommunications provider (TeleMercury). As an economic environment, Pelaxia's judiciary is efficient and effective. Pelaxia is highly open to investment and free trade. Pelaxia has top levels of economic freedom in many areas, although there is a heavy tax burden and inflexible job market. | ||
===Fondo de Soberanía Nacional=== | ===Fondo de Soberanía Nacional=== | ||
The FSN was set up in | The FSN was set up in 1999 to underpin long-term considerations when phasing petroleum revenues into the Pelaxian economy | ||
FSN manages the fund on behalf of the Ministry of Economy and Finance, which owns the fund on behalf of the Pelaxian people. The ministry determines the fund’s investment strategy, following advice from among others FSN and discussions in Parliament. The management mandate defines the investment universe and the fund's strategic reference index. The ministry regularly transfers petroleum revenue to the fund. The capital is invested abroad, to avoid overheating the Pelaxian economy and to shield it from the effects of oil price fluctuations. The fund invests in international equity and fixed-income markets and real estate. The aim is to have a diversified investment mix that will give the highest possible risk-adjusted return within the guidelines set by the ministry. | FSN manages the fund on behalf of the Ministry of Economy and Finance, which owns the fund on behalf of the Pelaxian people. The ministry determines the fund’s investment strategy, following advice from among others FSN and discussions in Parliament. The management mandate defines the investment universe and the fund's strategic reference index. The ministry regularly transfers petroleum revenue to the fund. The capital is invested abroad, to avoid overheating the Pelaxian economy and to shield it from the effects of oil price fluctuations. The fund invests in international equity and fixed-income markets and real estate. The aim is to have a diversified investment mix that will give the highest possible risk-adjusted return within the guidelines set by the ministry. | ||
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The fund was set up to give the government room for manoeuvring in fiscal policy should oil prices drop or the mainland economy contract. It also served as a tool to manage the financial challenges of an ageing population and an expected drop in petroleum revenue. The fund was designed to be invested for the long term, but in a way that made it possible to draw on when required. | The fund was set up to give the government room for manoeuvring in fiscal policy should oil prices drop or the mainland economy contract. It also served as a tool to manage the financial challenges of an ageing population and an expected drop in petroleum revenue. The fund was designed to be invested for the long term, but in a way that made it possible to draw on when required. | ||
The fund is an integrated part of the government’s annual budget. Its capital inflow consists of all government petroleum revenue, net financial transactions related to petroleum activities, net of what is spent to balance the state’s non-oil budget deficit. This means the fund is fully integrated with the state budget and that net allocations to the fund reflect the total budget surplus, including petroleum revenue. Fiscal policy is based on the guideline that over time the structural, non-oil budget deficit shall correspond to the real return on the fund, estimated at 30 percent. The so-called spending rule, stating that no more than 30 percent of the fund over time should be spent on the annual national budget, was first established in | The fund is an integrated part of the government’s annual budget. Its capital inflow consists of all government petroleum revenue, net financial transactions related to petroleum activities, net of what is spent to balance the state’s non-oil budget deficit. This means the fund is fully integrated with the state budget and that net allocations to the fund reflect the total budget surplus, including petroleum revenue. Fiscal policy is based on the guideline that over time the structural, non-oil budget deficit shall correspond to the real return on the fund, estimated at 30 percent. The so-called spending rule, stating that no more than 30 percent of the fund over time should be spent on the annual national budget, was first established in 2000. | ||
===Taxation=== | ===Taxation=== | ||