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

Carlos Caceres, Serhan Cevik, Marco Committeri and Borja Gracia

No 2013/079, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; hydrocarbon revenue; budget deficit; exchange rate; government spending; Fiscal policy; cyclical adjustment; fiscal sustainability; permanent income hypothesis; fiscal rules; natural resources; public financial management; fiscal policy rule; potential GDP; natural resource; expenditure rule; financial asset; Fiscal stance; Global (search for similar items in EconPapers)
Pages: 32
Date: 2013-03-27
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Citations: View citations in EconPapers (4)

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Journal Article: The Day After Tomorrow: Designing an Optimal Fiscal Strategy for Libya (2015)
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