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

Author/Editor: Issouf Samaké ; Priscilla S. Muthoora ; Bruno Versailles
Publication Date: June 11, 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: 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.
Series: Working Paper No. 13/144
Subject(s): Fiscal sustainability | Cameroon | Economic growth | Oil revenues | Fiscal policy | Public investment | Natural resources | Low-income developing countries | Economic models

Notes Also available in French
Publication Date: June 11, 2013
ISBN/ISSN: 9781484318256/1018-5941 Format: Paper
Stock No: WPIEA2013144 Pages: 35
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