Designing a Fiscal Framework for a Prospective Commodity Producer: Options for Lebanon

By Mariusz Jarmuzek, Diego Mesa Puyo, Najla Nakhle

October 23, 2014

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Mariusz Jarmuzek, Diego Mesa Puyo, and Najla Nakhle. Designing a Fiscal Framework for a Prospective Commodity Producer: Options for Lebanon, (USA: International Monetary Fund, 2014) accessed October 14, 2024

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

Lebanon is expected to have gas resources in its Mediterranean basin, and these could turn the country into a natural gas producer over the next decade. Lebanon’s economy and institutions will thus need to adapt to the challenges and opportunities that such change will bring. In this paper, we address how Lebanon’s fiscal framework will need to be reformulated to take into account potential resource revenue. Designing a fiscal regime appropriately is an absolute prerequisite to make sure the government can receive a fair share of the resources while investors face appropriate incentives to invest and develop the sector. This step should be followed by setting macro-fiscal anchors and supporting institutions. The prospective framework should initially be focused on ensuring fiscal sustainability and intergenerational equity, given the estimated relatively short horizon of Lebanon’s gas resources. Strong institutional arrangements also need to underpin the prospective framework, to ensure that the pace of resource wealth’s use is set in line with Lebanon’s capacity constraints.

Subject: Expenditure, Fiscal governance, Fiscal policy, Fiscal stance, Public financial management (PFM)

Keywords: Accountability, Fiscal governance, Fiscal policy, Fiscal stance, Global, Government company, Government share, Government take option, Government wealth, Lebanese authorities, Natural resource, Oil-producing countries, Rate of return, Regime option, Resource revenue, Resource revenue management, Risk tolerance, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/193
Stock No:

WPIEA2014193
ISBN:

9781484346143
ISSN:

1018-5941

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