Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon

36 Pages Posted: 27 Jun 2013

See all articles by Issouf Samaké

Issouf Samaké

International Monetary Fund (IMF)

Priscilla Muthoora

International Monetary Fund (IMF)

Bruno Versailles

affiliation not provided to SSRN

Date Written: June 2013

Abstract

This paper assesses the implications of the use of oil revenue for public investment on growth and fiscal sustainability in Cameroon. We develop a dynamic stochastic general equilibrium model to analyze the effects of such investment on growth and on the path of key fiscal indicators, such as the non-oil primary deficit and public debt. Policy scenarios show that Cameroon’s large infrastructural needs and relatively low current debt levels could justify a temporary deviation from traditional policy advice that suggests saving part of the oil revenue to smooth expenditure over time. Model simulations show that a relatively high degree of efficiency of public investment is needed for scaled-up public investment to make a significant contribution to growth, while maintaining fiscal sustainability.

Keywords: Fiscal sustainability, Cameroon, Economic growth, Oil revenues, Fiscal policy, Public investment, Natural resources, Low-income developing countries, Economic models, fiscal policy, fiscal policy, DSGE, natural resource-rich countries, low-income countries, public investment, growth., fiscal sustainability, public debt, government spending, primary deficit, budget constraint, fiscal adjustment, public spending, tax rates, fiscal reaction function, fiscal reaction, public investment spending, fiscal policies, fiscal stance, primary expenditure, fiscal outcomes, fiscal revenue, revenue collection, capital expenditure, fiscal performance, tax base, government revenue, budget process, fiscal rul

JEL Classification: C11, C15, C61, E22, E23, E27, H61, O11

Suggested Citation

Samaké, Issouf and Muthoora, Priscilla and Versailles, Bruno, Fiscal Sustainability, Public Investment, and Growth in Natural Resource-Rich, Low-Income Countries: The Case of Cameroon (June 2013). IMF Working Paper No. 13/144. Available at SSRN: https://ssrn.com/abstract=2285963

Issouf Samaké (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Priscilla Muthoora

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Bruno Versailles

affiliation not provided to SSRN ( email )

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