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Trinidad and tobago: The Energy Boom and Proposals for a Sustainable Fiscal Policy

International Monetary Fund

No 2005/197, IMF Working Papers from International Monetary Fund

Abstract: Trinidad and Tobago is experiencing an energy boom stronger than the ones in 1970s and 1980s. The main fiscal policy challenge is to ensure that the increased revenues from the ultimately exhaustible resources are used in a way that protects the competitiveness of the nonenergy sector, builds assets to ensure intergenerational equity, and provides a cushion for stabilization. This paper derives estimates of a sustainable level of primary fiscal balance using Friedman's permanent income hypothesis. These estimates can be used as a guide for the formulation of medium- and long-term fiscal policy frameworks.

Keywords: WP; fund; resource fund; requireparliamentary approval; resource savings fund; Trinidad and Tobago; oil boom; permanent income hypothesis; oil price; cost-benefit profile; industrialization strategy; investment strategy; fund staff estimate; resource funds can; savings fund; energy resource; Energy sector; Oil; Natural gas sector; Government consumption; Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 25
Date: 2005-10-01
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Citations: View citations in EconPapers (5)

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