Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon

By Issouf Samaké, Priscilla S Muthoora, Bruno Versailles

June 11, 2013

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Issouf Samaké, Priscilla S Muthoora, and Bruno Versailles. Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon, (USA: International Monetary Fund, 2013) accessed November 21, 2024

Also available in: français

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 assesses the implications of the use of oil revenue for public investment on growth and fiscal sustainability in Cameroon. We develop a dynamic stochastic general equilibrium model to analyze the effects of such investment on growth and on the path of key fiscal indicators, such as the non-oil primary deficit and public debt. Policy scenarios show that Cameroon’s large infrastructural needs and relatively low current debt levels could justify a temporary deviation from traditional policy advice that suggests saving part of the oil revenue to smooth expenditure over time. Model simulations show that a relatively high degree of efficiency of public investment is needed for scaled-up public investment to make a significant contribution to growth, while maintaining fiscal sustainability.

Subject: Expenditure, Fiscal policy, Oil production, Oil, gas and mining taxes, Production, Public investment spending, Taxes

Keywords: Africa, Cameroon, Capital stock, Debt ratio, DSGE, Efficiency level, Efficiency parameter, Fiscal policy, Gas and mining taxes, Global, Growth, Investment flow, Investment path, Investment-growth nexus, Low-income countries, Natural resource, Natural resource-rich countries, Oil, Oil production, Public investment, Public investment spending, Sub-Saharan Africa, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/144
Stock No:

WPIEA2013144
ISBN:

9781484318256
ISSN:

1018-5941

Notes

Also available in French

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