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Oil Revenue Assignments; Country Experiences and Issues

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  • Eric Mottu
  • Ehtisham Ahmad

Abstract

Based on country experiences, the paper assesses policy options to assign oil revenues to subnational governments (SNGs). The literature recommends that oil revenues be centralized. Given political economy considerations, this paper suggests that a possible alternative is to assign stable oil-tax bases to oil-producing SNGs, supplementing these with predictable transfers from the center. Although commonly used, oil revenue-sharing arrangements are the least preferable solution, as they complicate macroeconomic management and do not provide stable financing. Revenue sharing also does not diffuse separatist tendencies, since oil-producing SNGs would still be better off by keeping their oil revenues in full.

Suggested Citation

  • Eric Mottu & Ehtisham Ahmad, 2002. "Oil Revenue Assignments; Country Experiences and Issues," IMF Working Papers 02/203, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/203
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=16126
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    References listed on IDEAS

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    1. Ehtisham Ahmad & Ali M. Mansoor, 2002. "Indonesia; Managing Decentralization," IMF Working Papers 02/136, International Monetary Fund.
    2. Jorge Martinez-Vasquez & Jameson Boex, 2001. "Russia's Transition to a New Federalism," World Bank Publications, The World Bank, number 15248.
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    Cited by:

    1. Jiménez, Juan Pablo & Tromben, Varinia, 2006. "Fiscal policy and the commodities boom: the impact of higher prices for non-renewables in Latin America and the Caribbean," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    2. Grant Bishop & Anwar Shah, 2008. "Fiscal Federalism and Petroleum Resources in Iraq," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0826, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. repec:spa:wpaper:2014wpecon03 is not listed on IDEAS
    4. Atsushi Iimi, 2006. "Did Botswana Escape from the Resource Curse?," IMF Working Papers 06/138, International Monetary Fund.
    5. Lauro Carnicelli & Fernando Antonio Slaibe Postali, 2014. "Oil windfalls and local fiscal effort: a propensity score analysis," Working Papers, Department of Economics 2014_03, University of São Paulo (FEA-USP).
    6. Ansari, Dawud, 2016. "Resource curse contagion in the case of Yemen," Resources Policy, Elsevier, vol. 49(C), pages 444-454.
    7. Hjort, Jonas, 2006. "Citizen funds and Dutch Disease in developing countries," Resources Policy, Elsevier, vol. 31(3), pages 183-191, September.

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