Harnessing Resource Wealth for Inclusive Growth in Fragile States
Electronic Access:
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Summary:
Like other fragile sub-Saharan African countries, Côte d’Ivoire, Guinea, Liberia, and Sierra Leone are seeking to harness their natural resource potential in the context of ambitious development strategies. This study investigates options for scaling up public investment and expanding social safety nets in a general equilibrium setting. First, it assesses the macro-fiscal implications of alternative fiscal rules for public investment, and, second, it explicitly accounts for redistribution through direct cash transfers. Results show that 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. The scaling-up magnitudes, however, depend on the size of projected resource revenue and absorptive capacity. Adding a social transfer raises private consumption, suggesting that a fraction of the resource revenue could be used to expand safety nets.
Series:
Working Paper No. 2015/025
Subject:
Consumption taxes Debt sustainability Environment Expenditure External debt National accounts Natural resources Private consumption Public investment spending Taxes
English
Publication Date:
February 11, 2015
ISBN/ISSN:
9781498392570/1018-5941
Stock No:
WPIEA2015025
Pages:
54
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