Fiscal Policy Sustainability in Oil-Producing Countries

72 Pages Posted: 15 Feb 2006

See all articles by Claire Liuksila

Claire Liuksila

affiliation not provided to SSRN

Alejandro García

affiliation not provided to SSRN

Sheila Bassett

affiliation not provided to SSRN

Date Written: November 1994

Abstract

Assessing the sustainability of a given fiscal policy is especially important for countries that depend on income from exhaustible resources. Political and growth pressures may push governments to raise expenditure when revenue from exhaustible resources rises, but cutting outlays when price swings reduce income is often difficult. Traditional fiscal accounting may give a misleading view of policy sustainability. This paper argues that for countries in which a significant proportion of government revenue is derived from the exploitation of an exhaustible natural resource, fiscal policy sustainability can best be assessed within a permanent income framework that takes into account total government wealth, including the imputed wealth from reserves of natural resources. Using this framework, the paper takes a sample of six countries where government revenue from petroleum extraction is significant and draws conclusions about the sustainability of their fiscal policies during 1980-92.

JEL Classification: E61, Q38

Suggested Citation

Liuksila, Claire and García, Alejandro and Bassett, Sheila, Fiscal Policy Sustainability in Oil-Producing Countries (November 1994). IMF Working Paper, Vol. , pp. 1-72, 1994. Available at SSRN: https://ssrn.com/abstract=883895

Claire Liuksila (Contact Author)

affiliation not provided to SSRN

Alejandro García

affiliation not provided to SSRN

No Address Available

Sheila Bassett

affiliation not provided to SSRN

No Address Available

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