Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle

Author/Editor:

International Monetary Fund

Publication Date:

February 1, 2010

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle. We find that OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending. However, this trend was partially reversed when oil prices went down in 2009. We also find evidence that fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity. In addition, we estimate that a small reduction in oil prices could lead to very large financing needs in the near future. Finally, we show that long-term fiscal sustainability positions in OPCs have worsened.

Series:

Working Paper No. 10/28

Subject:

English

Publication Date:

February 1, 2010

ISBN/ISSN:

9781451962536/1018-5941

Stock No:

WPIEA2010028

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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