The Day After Tomorrow: Designing an Optimal Fiscal Strategy for Libya

By Carlos Caceres, Serhan Cevik, Marco Committeri, Borja Gracia

March 27, 2013

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Format: Chicago

Carlos Caceres, Serhan Cevik, Marco Committeri, and Borja Gracia. The Day After Tomorrow: Designing an Optimal Fiscal Strategy for Libya, (USA: International Monetary Fund, 2013) accessed November 8, 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

Libya is highly dependent on exhaustible and volatile hydrocarbon resources, which constitute the bulk of government revenues. Although resource wealth provides the means to promote socio-economic development, procyclical fiscal policies threaten macroeconomic stability as well as fiscal sustainability and intergenerational equity. In three parts, this paper provides an assessment of the cyclically adjusted fiscal stance, analyzes fiscal sustainability according the permanent income framework, and simulates various fiscal policy rules with the objective of developing a rule-based fiscal strategy that would delink the economy from oil price fluctuations, improve the management of resource wealth, and safeguard macroeconomic stability.

Subject: Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Fiscal sustainability

Keywords: Budget deficit, Cyclical adjustment, Exchange rate, Expenditure rule, Financial asset, Fiscal policy, Fiscal policy rule, Fiscal rules, Fiscal stance, Fiscal sustainability, Global, Government spending, Hydrocarbon revenue, Natural resource, Natural resources, Permanent income hypothesis, Potential GDP, Public financial management, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/079
Stock No:

WPIEA2013079
ISBN:

9781484389812
ISSN:

1018-5941

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