The Day After Tomorrow : Designing an Optimal Fiscal Strategy for Libya

Author/Editor: Carlos Caceres ; Serhan Cevik ; Ricardo Fenochietto ; Borja Gracia
Publication Date: March 27, 2013
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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: Libya is highly dependent on exhaustible and volatile hydrocarbon resources, which constitute the bulk of government revenues. Although resource wealth provides the means to promote socio-economic development, procyclical fiscal policies threaten macroeconomic stability as well as fiscal sustainability and intergenerational equity. In three parts, this paper provides an assessment of the cyclically adjusted fiscal stance, analyzes fiscal sustainability according the permanent income framework, and simulates various fiscal policy rules with the objective of developing a rule-based fiscal strategy that would delink the economy from oil price fluctuations, improve the management of resource wealth, and safeguard macroeconomic stability.
Series: Working Paper No. 13/79
Subject(s): Fiscal policy | Libya | Hydrocarbons | Revenues | Fiscal sustainability

Publication Date: March 27, 2013
ISBN/ISSN: 9781484389812/1018-5941 Format: Paper
Stock No: WPIEA2013079 Pages: 32
US$18.00 (Academic Rate:
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