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Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources; The Case of Gabon

  • Joseph Ntamatungiro
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    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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    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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    1. 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.
    2. Engel, Eduardo & Valdés, Rodrigo O., 2001. "Optimal fiscal strategy for oil exporting countries," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34818, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Willem H. Buiter, 1997. "Aspects of fiscal performance in some transition economies under fund-supported programs," LSE Research Online Documents on Economics 20353, London School of Economics and Political Science, LSE Library.
    4. Enzo Croce & V. Hugo Juan-Ramon, 2003. "Assessing Fiscal Sustainability; A Cross-Country Comparison," IMF Working Papers 03/145, International Monetary Fund.
    5. 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.
    6. 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.
    7. Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003. "Debt intolerance," MPRA Paper 13932, University Library of Munich, Germany.
    8. Nigel A Chalk, 1998. "Fiscal Sustainability with Non-Renewable Resources," IMF Working Papers 98/26, International Monetary Fund.
    9. 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.
    10. Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2002. "External Debt and Growth," IMF Working Papers 02/69, International Monetary Fund.
    11. Philip R. Gerson, 1998. "The Impact of Fiscal Policy Variables on Output Growth," IMF Working Papers 98/1, International Monetary Fund.
    12. Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
    13. Theodore M. Barnhill & George Kopits, 2003. "Assessing Fiscal Sustainability Under Uncertainity," IMF Working Papers 03/79, International Monetary Fund.
    14. Max Alier & Martin D Kaufman, 1999. "Nonrenewable Resources; A Case for Persistent Fiscal Surpluses," IMF Working Papers 99/44, International Monetary Fund.
    15. Thomas Baunsgaard, 2003. "Fiscal Policy in Nigeria; Any Role for Rules?," IMF Working Papers 03/155, International Monetary Fund.
    16. Qing Wang & Ugo Fasano-Filho, 2002. "Testing the Relationship Between Government Spending and Revenue; Evidence From GCC Countries," IMF Working Papers 02/201, International Monetary Fund.
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