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Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources

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  • Joseph Ntamatungiro
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    Abstract

    This paper proposes a framework for assessing fiscal sustainability in heavily indebted countries dependent on exhaustible resources, with reference to Gabon. It finds that fiscal sustainability could be achieved by: (i) developing a fiscal rule for the non-oil primary fiscal balance compatible with an objective for reducing the debt-to-non-oil GDP ratio; (ii) introducing a constant oil-based income transfer per capita allowing intergenerational equity; and (iii) building up an oil savings fund. Long-term simulations show that Gabon''s fiscal position is fragile and that a fiscal policy path consistent with the proposed framework could help achieve comfortable levels of net wealth.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/30.

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    Length: 38
    Date of creation: 01 Feb 2004
    Date of revision:
    Handle: RePEc:imf:imfwpa:04/30

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    Related research

    Keywords: Oil; Fiscal sustainability; Heavily indebted poor countries; fiscal policy; public debt; debt reduction; government revenue; external debt; primary deficit; fiscal adjustment; debt ratio; debt sustainability; stock of debt; fiscal effort; debt burden; fiscal deficits; fiscal balance; fiscal surpluses; budgetary allocations; government spending; debt service; indebted countries; heavily indebted countries; fiscal performance; fiscal balances; primary fiscal balance; budget management; fiscal position; domestic borrowing; primary fiscal deficits; government expenditure; long-term fiscal sustainability; fiscal impulse; debt relief; debt-service burden; budget constraint; government debt; debt stock; debt intolerance; government budget; government fiscal deficits; fiscal policies; debt obligations; public finances; central bank; debt-service; external debt service; domestic debt; debt dynamics; foreign borrowing; national debt; external debt burden; fiscal sustainability analysis; external payment; fiscal stance; debt rescheduling; tax base; domestic creditors; payment arrears; sovereign debt; external indebtedness; fiscal efforts; fiscal situation; debt crises; ratio of government expenditure; sovereign debt crises; pro-cyclical policies; debt stocks; bilateral loans; fiscal adjustment effort; fiscal strategy; government budget constraint; public spending; fiscal consolidation; high spending; tax collection; expenditure cuts; low debt; fiscal rule; repayments; cyclical fiscal policy; ratio of debt; taxation; expenditure programs; fiscal accounts; debt management; fiscal policy variables; fiscal deficit;

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    References

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    1. Willem H. Buiter, 1997. "Aspects of Fiscal Performance in Some Transition Economies Under Fund-Supported Programs," IMF Working Papers 97/31, International Monetary Fund.
    2. Kadima D. Kalonji & Boileau Loko & Raj Nallari & Montfort Mlachila, 2003. "The Impact of External Indebtednesson Poverty in Low-Income Countries," IMF Working Papers 03/61, International Monetary Fund.
    3. Arvind Subramanian & Xavier Sala-i-Martin, 2003. "Addressing the Natural Resource Curse," IMF Working Papers 03/139, International Monetary Fund.
    4. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," NBER Working Papers 9908, National Bureau of Economic Research, Inc.
      • Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003. "Debt intolerance," MPRA Paper 13932, University Library of Munich, Germany.
    5. Xavier Sala-i-Martin & Arvind Subramanian, 2003. "Addressing the Natural Resource Curse: An Illustration from Nigeria," NBER Working Papers 9804, National Bureau of Economic Research, Inc.
    6. Rodrigo O. Valdés & Eduardo Engel, 2000. "Optimal Fiscal Strategy for Oil Exporting Countries," IMF Working Papers 00/118, International Monetary Fund.
    7. M. Alier & Martin David Kaufman, 1999. "Nonrenewable Resources," IMF Working Papers 99/44, International Monetary Fund.
    8. Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011. "External Debt and Growth," Review of Economics and Institutions, Università di Perugia, vol. 2(3).
    9. Nigel Andrew Chalk, 1998. "Fiscal Sustainability with Non-Renewable Resources," IMF Working Papers 98/26, International Monetary Fund.
    10. Enzo Croce & V. Hugo Juan-Ramon, 2003. "Assessing Fiscal Sustainability," IMF Working Papers 03/145, International Monetary Fund.
    11. Qing Wang & Ugo Fasano-Filho, 2002. "Testing the Relationship Between Government Spending and Revenue," IMF Working Papers 02/201, International Monetary Fund.
    12. Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variableson Output Growth," IMF Working Papers 98/1, International Monetary Fund.
    13. Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
    14. Thomas Baunsgaard, 2003. "Fiscal Policy in Nigeria," IMF Working Papers 03/155, International Monetary Fund.
    15. Theodore M. Barnhill & George Kopits, 2003. "Assessing Fiscal Sustainability Under Uncertainity," IMF Working Papers 03/79, International Monetary Fund.
    16. M. O. Odedokun, 1997. "Dynamics of inflation in Sub-Saharan Africa: the role of foreign inflation, official and parallel market exchange rates, and monetary growth," Applied Financial Economics, Taylor & Francis Journals, vol. 7(4), pages 395-402.
    17. Diep Nuven, 1994. "Linkages in Price Level and Inflation Rate Between Cfa Franc Zone Countries and France," IMF Working Papers 94/93, International Monetary Fund.
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    Cited by:
    1. Jan-Peter Olters & Daniel Leigh, 2006. "Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy," IMF Working Papers 06/193, International Monetary Fund.
    2. Bandiera, Luca & Budina, Nina & Klijn, Michel & van Wijnbergen, Sweder, 2007. "The"how to"of fiscal sustainability : a technical manual for using the fiscal sustainability tool," Policy Research Working Paper Series 4170, The World Bank.

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