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Designing Oil Revenue Management Mechanisms : An Application to Chad

Author

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  • Campagne,Benoit Philippe Marcel
  • Kitzmuller,Markus
  • Tordo,Silvana

Abstract

Oil resources usually play a significant role in oil-rich countries, in gross domesticproduct and government revenues. High dependence of government revenues on oil can contribute to severerecession following an adverse commodity price shock, such as in 2014. This paper examines the extent to which a fiscalrule or stabilization fund could translate into a less pro-cyclical fiscal policy, with the government saving partof its oil revenues during periods of high prices and drawing down on the savings during difficult periods. Usingthe macro-structural model MFMod, the paper presents, evaluates, and discusses the strengths and weaknesses ofdifferent oil revenue management mechanisms applied to the specific case of Chad. The scenarios demonstrate that awell-designed management rule can successfully insulate thepublic budget from the oil price cycle, resulting in a significant reduction in the volatility of the economy.

Suggested Citation

  • Campagne,Benoit Philippe Marcel & Kitzmuller,Markus & Tordo,Silvana, 2020. "Designing Oil Revenue Management Mechanisms : An Application to Chad," Policy Research Working Paper Series 9402, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9402
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    References listed on IDEAS

    as
    1. Burns,Andrew & Campagne,Benoit Philippe Marcel & Jooste,Charl & Stephan,David Andrew & Bui,Thi Thanh, 2019. "The World Bank Macro-Fiscal Model Technical Description," Policy Research Working Paper Series 8965, The World Bank.
    2. Olivier Blanchard, 2018. "On the future of macroeconomic models," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 34(1-2), pages 43-54.
    3. Mr. George Kopits & Mr. Steven A. Symansky, 1998. "Fiscal Policy Rules," IMF Occasional Papers 1998/011, International Monetary Fund.
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