Measures of Fiscal Risk in Hydrocarbon-Exporting Countries

October 30, 2012

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Format: Chicago

Carlos Caceres, and Leandro Medina. Measures of Fiscal Risk in Hydrocarbon-Exporting Countries, (USA: International Monetary Fund, 2012) 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

The recent relatively high levels of global oil prices have led to a significant improvement in the public finances of several hydrocarbon-exporting countries. However, despite the increase in fiscal buffers, medium-term risks remain high. Fiscal vulnerabilities have increased as a consequence of the substantial spending packages that have been implemented in recent years. This has raised break-even prices—that is, the price levels that ensure that fiscal accounts are in balance at a given level of spending—in these countries. This study analyses such risks and develops measures of fiscal risk stemming from oil price fluctuations. An empirical application to hydrocarbon-exporting countries from the Middle East and North Africa region is included. Additionally, it is noted that countries with large net assets and proven oil reserves are much less vulnerable to fiscal risk than is indicated by standard measures based on break-even prices.

Subject: Commodity price fluctuations, Commodity prices, Financial institutions, Fiscal risks, Futures, Oil prices, Prices, Public financial management (PFM)

Keywords: Break-even, Breakeven price, Break-even price, Break-even prices, Commodity price fluctuations, Commodity prices, Fiscal risk, Fiscal risks, Futures, Global, Middle East, North Africa, Oil price, Oil prices, Price, Price change, Price of Brent, Price of oil, Spot market, Stochastic simulations, Volatility, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/260
Stock No:

WPIEA2012260
ISBN:

9781475530162
ISSN:

1018-5941

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