Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle

February 1, 2010

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Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle, (USA: International Monetary Fund, 2010) accessed December 22, 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

This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. We find that OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending. However, this trend was partially reversed when oil prices went down in 2009. We also find evidence that fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity. In addition, we estimate that a small reduction in oil prices could lead to very large financing needs in the near future. Finally, we show that long-term fiscal sustainability positions in OPCs have worsened.

Subject: Fiscal policy, Fiscal stance, National accounts, Oil prices, Oil, gas and mining taxes, Personal income, Prices, Taxes

Keywords: Fiscal policy, Fiscal policy change, Fiscal policy in OPCs, Fiscal policy position, Fiscal policy Procyclicality, Fiscal policy shock, Fiscal policy stance, Fiscal stance, Gas and mining taxes, Global, Investment expenditure, Low income OPCs, Oil, Oil GDP, Oil price, Oil prices, Oil producing countries, Oil revenue, Personal income, Price, Revenue, Short-term fiscal policy stance, Term perspective, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/028
Stock No:

WPIEA2010028
ISBN:

9781451962536
ISSN:

1018-5941

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