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Public Debt and Fiscal Vulnerability in the Middle East

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Author Info

  • Ludvig Söderling
  • Hanan Morsy
  • Martin Petri
  • Martin Hommes
  • Manal Fouad
  • Wojciech Maliszewski

Abstract

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/12.

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Length: 36
Date of creation: 01 Jan 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/12

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Related research

Keywords: Public debt; Oil; oil producers; oil producing countries; oil producing; oil prices; external debt; debt stock; net debt; oil-producing countries; debt ratios; domestic debt; debt ratio; oil revenues; debt dynamics; debt data; evolution of debt; debt relief; debt accumulation; debt sustainability; debt crises; oil reserves; central bank; debt crisis; debt service; private creditors; debt situation; debt reduction; natural gas; external debt data; external financing; domestic currency; government deficits; public finances; oil and gas; net debtors; gas data; external debt service; debt decomposition; hydrocarbon resources; oil importer; oil exporting countries; official creditors; natural resources; gas production; external debt accumulation; low debt; debt market; higher oil prices; nonconcessional debt; gas reserves; econometric analysis; domestic debt stock; oil market; public sector debt; debt rescheduling; long-term external debt; currency mismatches; sovereign debt; energy information administration; oil products; oil exporter; debt intolerance; currency debt;

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References

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  1. International Monetary Fund, 2004. "Financial Sector Development in the Middle East and North Africa," IMF Working Papers 04/201, International Monetary Fund.
  2. Rodrigo O. Valdés & Eduardo Engel, 2000. "Optimal Fiscal Strategy for Oil Exporting Countries," IMF Working Papers 00/118, International Monetary Fund.
  3. Jan-Peter Olters & Daniel Leigh, 2006. "Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy," IMF Working Papers 06/193, International Monetary Fund.
  4. Henning Bohn, 1998. "The Behavior Of U.S. Public Debt And Deficits," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 949-963, August.
  5. Taimur Baig & Abdul Abiad, 2005. "Underlying Factors Driving Fiscal Effort in Emerging Market Economies," IMF Working Papers 05/106, International Monetary Fund.
  6. Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2003. "Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters," NBER Working Papers 10036, National Bureau of Economic Research, Inc.
  7. Dalia Hakura, 2004. "Growth in the Middle East and North Africa," IMF Working Papers 04/56, International Monetary Fund.
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Citations

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Cited by:
  1. Andrea F. Presbitero, 2012. "Domestic debt in Low-Income Countries," Economics Bulletin, AccessEcon, vol. 32(2), pages 1099-1112.
  2. Wojciech Maliszewski, 2009. "Fiscal Policy Rules for Oil-Producing Countries," IMF Working Papers 09/126, International Monetary Fund.
  3. Nese Erbil, 2011. "Is Fiscal Policy Procyclical in Developing Oil-Producing Countries?," IMF Working Papers 11/171, International Monetary Fund.

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