Are Diamonds Forever? Using the Permanent Income Hypothesis to Analyze Botswana’s Reliance on Diamond Revenue

March 1, 2008

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 study assesses the sustainability of Botswana’s diamond-related fiscal revenue. Diamond reserves are not adequate to generate enough permanent revenue to sustain a high level of expenditure. Under the current fiscal rule that no debt may be accumulated, Botswana will have to save more to avoid an abrupt adjustment in the medium term.

Subject: Expenditure, Fiscal consolidation, Fiscal rules, GDP measurement, Personal income

Keywords: income, resource, revenue, WP

Pages:
13
Volume:
2008
DOI:
https://doi.org/10.5089/9781451869415.001
Issue:
080
Series:
Working Paper No. 2008/080
Stock No:
WPIEA2008080
ISBN:
9781451869415
ISSN:
1018-5941

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