Fiscal Policy Sustainability in Oil-Producing Countries

By Sheila Bassett, Claire Liuksila, Alejandro García

November 1, 1994

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Format: Chicago

Sheila Bassett, Claire Liuksila, and Alejandro García. Fiscal Policy Sustainability in Oil-Producing Countries, (USA: International Monetary Fund, 1994) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Assessing the sustainability of a given fiscal policy is especially important for countries that depend on income from exhaustible resources. Political and growth pressures may push governments to raise expenditure when revenue from exhaustible resources rises, but cutting outlays when price swings reduce income is often difficult. Traditional fiscal accounting may give a misleading view of policy sustainability. This paper argues that for countries in which a significant proportion of government revenue is derived from the exploitation of an exhaustible natural resource, fiscal policy sustainability can best be assessed within a permanent income framework that takes into account total government wealth, including the imputed wealth from reserves of natural resources. Using this framework, the paper takes a sample of six countries where government revenue from petroleum extraction is significant and draws conclusions about the sustainability of their fiscal policies during 1980-92.

Subject: Commodities, Fiscal policy, Fiscal stance, Oil, Oil prices, Oil, gas and mining taxes, Prices, Taxes

Keywords: Exchange rate, Financial position, Fiscal stance, Gas and mining taxes, Interest rate, Net debtor, Net debtor position, Net foreign exchange earner, Net government wealth position, Net impact, Net interest bill, Net wealth, Oil, Oil price, Oil prices, Oil revenue, Wealth position, Wealth projection, WP

Publication Details

Pages:

72
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/137
Stock No:

WPIEA1371994
ISBN:

9781451855852
ISSN:

1018-5941

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