How to Design a Fiscal Strategy in a Resource-Rich Country

IMF How To Notes, March 9, 2021

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How to Design a Fiscal Strategy in a Resource-Rich Country

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Bibliographic details

• Authors: Olivier Basdevant, Eslem Imamoglu
• Published: March 9, 2021
• Series: IMF How To Notes
• DOI: https://doi.org/10.5089/9781513568799.061

Overview and purpose

• Provides operational guidance for policymakers and IMF staff teams on designing—or revising—a fiscal strategy in resource-rich countries (RRC).
• Objective: Ensure resource revenue can support fiscal sustainability and development and equity objectives.
• Emphasizes the stabilization challenges created by resource revenues because of their size, uncertainty, volatility, and finite nature.
• Guidance is general and intended to be applicable to RRCs with a range of income levels, resource endowments, and macroeconomic contexts.
• Designed primarily to help policymakers analyze the trade-offs associated with alternative fiscal paths and select the right fiscal strategy, given country-specific circumstances.

Key themes and findings

• Resource revenue management can support:
  • fiscal sustainability
  • development objectives
  • equity objectives
• Resource revenues pose significant stabilization challenges due to:
  • size
  • uncertainty
  • volatility
  • finite nature
• Applicability:
  • Relevant across a range of income levels, resource endowments, and macroeconomic contexts.
• Main functional aim:
  • Help analyze trade-offs among alternative fiscal paths and guide selection of an appropriate fiscal strategy tailored to country-specific circumstances.

Practical focus for policymakers and IMF teams

• Operational guidance intended to:
  • inform design or revision of fiscal strategies in RRCs
  • provide a framework for weighing alternative fiscal paths
  • assist in selecting a fiscal strategy consistent with country-specific objectives and constraints

Subjects and keywords

• Subject:
  • Expenditure
  • Fiscal policy
  • Fiscal stance
  • Fiscal sustainability
  • Natural resources
• Keywords:
  • commodity revenue
  • FADHTN
  • HTN
  • liquid asset
  • resource consumption
  • resource revenue
  • resource wealth

How to Design a Fiscal Strategy in a Resource-Rich Country. Olivier Basdevant and Eslem Imamoglu. March 9, 2021. DOI: https://doi.org/10.5089/9781513568799.061. Canonical URL: https://www.imf.org/en/publications/fiscal-affairs-department-how-to-notes/issues/2021/03/09/how-to-design-a-fiscal-strategy-in-a-resource-rich-country-50069

Content in this bundle

• How to Design a Fiscal Strategy in a Resource-Rich Country; IMF How-to-Notes 21/01; March 2021
  • How to Design a Fiscal Strategy in a Resource-Rich Country; IMF How-to-Notes 21/01; March 2021 (Markdown version)
  • How to Design a Fiscal Strategy in a Resource-Rich Country; IMF How-to-Notes 21/01; March 2021 (PDF)