Public Debt and Fiscal Vulnerability in the Middle East

By Ludvig Söderling, Hanan Morsy, Martin Petri, Martin Hommes, Manal Fouad, Wojciech Maliszewski

January 1, 2007

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Ludvig Söderling, Hanan Morsy, Martin Petri, Martin Hommes, Manal Fouad, and Wojciech Maliszewski. Public Debt and Fiscal Vulnerability in the Middle East, (USA: International Monetary Fund, 2007) accessed December 26, 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

Public debt in the Middle East increased during the mid-1990s mainly because of fiscal expansions. It decreased in recent years, thanks to high oil revenue, economic growth, some primary non-oil fiscal adjustment, and debt relief. While countries in the Middle East appear to have adequately reacted to high indebtedness in the past, public debt levels remain uncomfortably high in many, particularly non-oil producing countries and middle income oil producers. Non-oil countries adjust mainly by increasing revenues, whereas oil countries adjust expenditure. For non-oil producing countries, substantial fiscal adjustment would be needed to bring debt down to below 50 percent of GDP. Oil producers as a group appear to follow sustainable, though procyclical, fiscal policies. Middle-income (but not high-income) oil producing countries would need to adjust somewhat to bring their policies in line with the permanent oil income benchmark.

Subject: Fiscal stance, Oil, Oil prices, Oil, gas and mining taxes, Public debt

Keywords: Balance, Debt ratio, GDP, Revenue, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/012
Stock No:

WPIEA2007012
ISBN:

9781451865769
ISSN:

1018-5941

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