Fiscal Sustainability with Non-Renewable Resources

Nigel Chalk

No 1998/026, IMF Working Papers from International Monetary Fund

Abstract: This paper assesses sustainable fiscal behavior in an economy where wealth is derived predominantly from a non-renewable resource. It explores the issue in a simple dynamic framework that highlights the structural weaknesses in the underlying budgetary position, takes into account the rate of depletion of a country’s natural resource base, and examines the impact of changes in a country’s terms of trade. An alternative indicator of fiscal sustainability is derived, and the principal factors determining sustainability are identified. The results of the analysis are applied to Venezuela and Kuwait.

Keywords: WP; natural resource; core deficit; private sector; rate of return; resource depletion; Fiscal sustainability; non-renewable resource; oil producers; net asset position; deficit-GDP ratio; asset accumulation; resource exploitation; government assets; resource constraint; resource wealth; Natural resources; Fiscal stance; Terms of trade; Personal income (search for similar items in EconPapers)
Pages: 36
Date: 1998-03-01
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Citations: View citations in EconPapers (12)

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