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Fiscal Policy in Nigeria; Any Role for Rules?

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  • Thomas Baunsgaard

Abstract

Fiscal policy in oil-producing countries can be profoundly affected by oil revenue uncertainty and volatility. Policy formulation should factor in the exhaustibility of the natural resources and aim at reducing oil revenue volatility passed on to the economy. Past fiscal policy in Nigeria has not been successful in this regard, since both revenue and expenditure have been highly volatile, to a large extent reflecting oil price developments. The paper discusses the role an appropriately designed fiscal rule, nested within the long-run sustainable use of oil revenue, could have in providing a more stable framework for fiscal policy formulation. It also highlights practical implementation and transitional issues.

Suggested Citation

  • Thomas Baunsgaard, 2003. "Fiscal Policy in Nigeria; Any Role for Rules?," IMF Working Papers 03/155, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/155
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    References listed on IDEAS

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    1. Eifert, Benn*Gelb, Alan*Borje Tallroth, Nils, 2002. "The political economy of fiscal policy and economic management in oil exporting countries," Policy Research Working Paper Series 2899, The World Bank.
    2. Steven A Barnett & Rolando Ossowski, 2002. "Operational Aspects of Fiscal Policy in Oil-Producing Countries," IMF Working Papers 02/177, International Monetary Fund.
    3. Rodrigo O. Valdes & Eduardo M Engel, 2000. "Optimal Fiscal Strategy for Oil Exporting Countries," IMF Working Papers 00/118, International Monetary Fund.
    4. Ernesto Talvi & Carlos A. Vegh, 2000. "Tax Base Variability and Procyclical Fiscal Policy," NBER Working Papers 7499, National Bureau of Economic Research, Inc.
    5. James Daniel, 2001. "Hedging Government Oil Price Risk," IMF Working Papers 01/185, International Monetary Fund.
    6. George Kopits, 2001. "Fiscal Rules; Useful Policy Framework or Unnecessary Ornament?," IMF Working Papers 01/145, International Monetary Fund.
    7. Max Alier & Martin D Kaufman, 1999. "Nonrenewable Resources; A Case for Persistent Fiscal Surpluses," IMF Working Papers 99/44, International Monetary Fund.
    8. Sheila Bassett & Claire Liuksila & Alejandro García, 1994. "Fiscal Policy Sustainability in Oil-Producing Countries," IMF Working Papers 94/137, International Monetary Fund.
    9. Thomas Baunsgaard, 2001. "A Primeron Mineral Taxation," IMF Working Papers 01/139, International Monetary Fund.
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    Citations

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    Cited by:

    1. Victor Ugbem Oboh, 2017. "Monetary and Fiscal Policy Coordination in Nigeria: A Set Theoretic Approach," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(1), pages 48-58, March.
    2. Damian Ondo Mañe, 2005. "Emergence of the Gulf of Guinea in the Global Economy; Prospects and Challenges," IMF Working Papers 05/235, International Monetary Fund.
    3. Jan-Peter Olters & Daniel Leigh, 2006. "Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy; Lessons from Gabon," IMF Working Papers 06/193, International Monetary Fund.
    4. Odusola, Ayodele, 2006. "Tax Policy Reforms in Nigeria," WIDER Working Paper Series 003, World Institute for Development Economic Research (UNU-WIDER).
    5. Budina, Nina & van Wijnbergen, Sweder, 2007. "Quantitative approaches to fiscal sustainability analysis : a new World Bank tool applied to Turkey," Policy Research Working Paper Series 4169, The World Bank.
    6. Ilkin Sabiroglu & Samad Bashirli & Faiq Qasimli, 2011. "Creating a Favourable Deployment Mechanism of Oil and Gas Revenues with Regard to Volatile Oil Prices: The Case of Azerbaijan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(1), pages 179-199, September.
    7. Joseph Ntamatungiro, 2004. "Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources; The Case of Gabon," IMF Working Papers 04/30, International Monetary Fund.
    8. 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.
    9. Modinat O. Olusoji, 2014. "Policy Framework and Management of Sustainable Macroeconomic Stability in Nigeria: Processes, Challenges and Prospects," International Journal of Social Science Research, Macrothink Institute, vol. 2(2), pages 218-228, September.

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