Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle

IMF Working Papers, February 1, 2010

Source details

Canonical URL

Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: February 1, 2010
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451962536.001

Summary of paper

• Publication date: February 1, 2010
• This paper presents a detailed analysis of the average fiscal policy responses of oil producing countries (OPCs) to the recent oil price cycle.
• Key findings:
  • OPCs worsened their non-oil primary balances substantially during 2003-2008 driven by an increase in primary spending.
  • The deterioration in non-oil primary balances was partially reversed when oil prices went down in 2009.
  • Fiscal policy has been procyclical and has hence exacerbated the fluctuations in economic activity.
  • A small reduction in oil prices could lead to very large financing needs in the near future.
  • Long-term fiscal sustainability positions in OPCs have worsened.

Evidence on fiscal stance and procyclicality

• Fiscal stance observations:
  • Non-oil primary balances worsened substantially during 2003-2008.
  • Primary spending was the driving factor behind the worsening non-oil primary balances in 2003-2008.
  • The downward oil price shock in 2009 led to a partial reversal of the prior deterioration.
• Procyclicality:
  • The paper finds evidence that fiscal policy in OPCs has been procyclical, amplifying economic fluctuations.

Risks and financing needs

• Oil price sensitivity:
  • The paper estimates that a small reduction in oil prices could lead to very large financing needs in the near future.
• Implication:
  • Short-term fiscal policy stance in OPCs is vulnerable to oil price swings and can create substantial near-term financing pressures.

Long-term fiscal sustainability

• Finding:
  • Long-term fiscal sustainability positions in OPCs have worsened.

Metadata and classification

• Subject: Fiscal policy, Fiscal stance, National accounts, Oil prices, Oil, gas and mining taxes, Personal income, Prices, Taxes
• Keywords: fiscal policy, fiscal policy change, fiscal policy in OPCs, fiscal policy position, fiscal policy Procyclicality, fiscal policy shock, fiscal policy stance, Fiscal stance, gas and mining taxes, Global, investment expenditure, low income OPCs, Oil, oil GDP, oil price, Oil prices, Oil producing countries, oil revenue, Personal income, price, revenue, short-term fiscal policy stance, term perspective, WP
• Publication details:
  • Pages: 24
  • Volume: 2010
  • Issue: 028
  • Series: Working Paper No. 2010/028
  • DOI: https://doi.org/10.5089/9781451962536.001
  • Stock No: WPIEA2010028
  • ISBN: 9781451962536
  • ISSN: 1018-5941
• Citation preview on page:
  • International Monetary Fund. "Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle", IMF Working Papers 2010, 028 (2010), accessed 9/17/2026, https://doi.org/10.5089/9781451962536.001

International Monetary Fund. Fiscal Policy in Oil Producing Countries During the Recent Oil Price Cycle (IMF Working Paper No. 2010/028).

Content in this bundle

• _wp1028
  • _wp1028 (Markdown version)
  • _wp1028 (PDF)