Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon
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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.
Series:
Working Paper No. 2013/144
Subject:
Expenditure Fiscal policy Oil production Oil, gas and mining taxes Production Public investment spending Taxes
Notes:
English
Publication Date:
June 11, 2013
ISBN/ISSN:
9781484318256/1018-5941
Stock No:
WPIEA2013144
Pages:
35
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