Too Much of a Good Thing? Prudent Management of Inflows under Economic Citizenship Programs

By Xin Cindy Xu, Ahmed El-Ashram, Judith Gold

May 1, 2015

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Format: Chicago

Xin Cindy Xu, Ahmed El-Ashram, and Judith Gold. Too Much of a Good Thing? Prudent Management of Inflows under Economic Citizenship Programs, (USA: International Monetary Fund, 2015) accessed December 3, 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

Economic Citizenship Programs (ECPs) have recently been proliferating, with large and potentially volatile inflows of investment and fiscal revenues generating significant benefits for small economies, but also posing substantial challenges. This paper discusses recent developments and implications of such programs for fiscal discipline and the real economy, including risks to macroeconomic and financial stability, with a focus on small state economies. It discusses the prudent management of these programs, overviews strategies to minimize risks to various sectors, and addresses potential governance and integrity challenges. The paper proposes a framework for managing inflows and savings from ECPs to contain macroeconomic risks, and it recommends the establishment of a sovereign wealth fund (SWF) where such revenues are large and persistent.

Subject: Budget planning and preparation, Expenditure, Fiscal policy, Fiscal stance, Public debt, Public investment spending

Keywords: Caribbean, Central bank, Citizenship-by-Investment, Country authorities, Dutch Disease, Economic Citizenship Programs, Economic Residency Programs, ECP country, ECP flow, ECP inflow, ECP receipt, ECP resource, Fiscal stance, Global, Golden Visa, Immigrant Investor Programs, Investment strategy, Macroeconomic Stability, Management framework, National Development Funds, Pacific Island Countries, Pacific Islands, Private sector, Public investment spending, Sovereign Wealth Fund (SWF), St. Kitts and Nevis, Stabilization fund, SWF investment, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/093
Stock No:

WPIEA2015093
ISBN:

9781484353783
ISSN:

1018-5941

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