Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources: The Case of Gabon
IMF Working Papers, February 1, 2004
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- Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources: The Case of Gabon
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Bibliographic details
- Authors: Joseph Ntamatungiro
- Published: February 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451844948.001
Summary
- This paper proposes a framework for assessing fiscal sustainability in heavily indebted countries dependent on exhaustible resources, with reference to Gabon.
- It finds that fiscal sustainability could be achieved by:
- (i) developing a fiscal rule for the non-oil primary fiscal balance compatible with an objective for reducing the debt-to-non-oil GDP ratio;
- (ii) introducing a constant oil-based income transfer per capita allowing intergenerational equity; and
- (iii) building up an oil savings fund.
- Long-term simulations show that Gabon's fiscal position is fragile and that a fiscal policy path consistent with the proposed framework could help achieve comfortable levels of net wealth.
Key findings and themes
- Fiscal rule design:
- Emphasis on the non-oil primary fiscal balance as the policy instrument.
- Compatibility requirement with an objective for reducing the debt-to-non-oil GDP ratio.
- Intergenerational equity:
- Introduction of a constant oil-based income transfer per capita to allow intergenerational equity.
- Sovereign saving:
- Building up an oil savings fund is central to the framework.
- Fiscal vulnerability:
- Long-term simulations indicate Gabon's fiscal position is fragile without policy adjustments.
Policy recommendations and framework components
- Develop a fiscal rule for the non-oil primary fiscal balance consistent with a debt-reduction objective for the debt-to-non-oil GDP ratio.
- Introduce a constant per capita oil-based income transfer to promote intergenerational equity.
- Establish and build up an oil savings fund to convert exhaustible resource wealth into sustainable net wealth.
Publication and metadata
- Author: Joseph Ntamatungiro
- Date: February 1, 2004
- Series: IMF Working Papers
- Working Paper No.: 2004/030
- Issue: 030
- Volume: 2004
- Pages: 38
- DOI: https://doi.org/10.5089/9781451844948.001
- Stock No: WPIEA0302004
- ISBN: 9781451844948
- ISSN: 1018-5941
- Subjects: Commodities, Fiscal policy, Fiscal stance, Fiscal sustainability, Oil, Oil, gas and mining taxes, Public debt, Taxes
- Keywords: debt, debt ratio, debt reduction objective, FFG position, fiscal policy, Fiscal stance, fiscal sustainability, Gabon, gas and mining taxes, GDP debt ratio, income transfer, intergenerational equity, net wealth, oil, Oil, oil GDP, oil revenue, savings fund, sustainability analysis, WP
Source: IMF Working Paper by Joseph Ntamatungiro, February 1, 2004.