Harnessing Resource Wealth for Inclusive Growth in Fragile States
IMF Working Papers, February 11, 2015
Source details
- Canonical URL
- Harnessing Resource Wealth for Inclusive Growth in Fragile States
Other formats
Bibliographic details
- Authors: Corinne C Delechat, John W Clark JR, Pranav Gupta, Malangu Kabedi-Mbuyi, Mesmin Koulet-Vickot, Carla Macario, Toomas Orav, Manuel Rosales Torres, Rene Tapsoba, Dmitry Zhdankin, Susan S. Yang
- Published: February 11, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498392570.001
Summary and scope
- Focus countries: Côte d’Ivoire, Guinea, Liberia, and Sierra Leone.
- Objective: Investigate options for scaling up public investment and expanding social safety nets in a general equilibrium setting.
- Two main analyses:
- Assess macro-fiscal implications of alternative fiscal rules for public investment.
- Explicitly account for redistribution through direct cash transfers.
- Key conclusion: A sustainable non-resource deficit target is robust to the high uncertainty of resources output and prices, while delivering growth benefits through higher public investment.
Main findings
- Sustainable non-resource deficit target:
- Robust to high uncertainty in resource output and prices.
- Delivers growth benefits via higher public investment.
- Scaling-up magnitudes:
- Depend on the size of projected resource revenue and absorptive capacity.
- Social transfers:
- Adding a social transfer raises private consumption.
- Implies that a fraction of resource revenue could be used to expand safety nets.
Policy implications and recommendations
- Adopt fiscal rules that target a sustainable non-resource deficit to manage resource revenue volatility while enabling higher public investment.
- Calibrate scaling-up of public investment to:
- Projected resource revenue size.
- Absorptive capacity constraints.
- Consider allocating a fraction of resource revenue to direct cash transfers (social safety nets) to raise private consumption and support redistribution objectives.
Methodology (brief)
- General equilibrium framework used to evaluate:
- Macro-fiscal effects of alternative fiscal rules for public investment.
- Redistribution through direct cash transfers.
Subject areas and keywords (as provided)
- Subject: Consumption taxes, Debt sustainability, Environment, Expenditure, External debt, National accounts, Natural resources, Private consumption, Public investment spending, Taxes
- Keywords: Consumption taxes, Debt sustainability, fragile states, inclusive growth, investment efficiency, investment path, MRU country, natural resource, Natural resources, Private consumption, public investment, Public investment spending, resource revenue, revenue profile, social safety nets, Sub-Saharan Africa, West Africa, WP