Operational Aspects of Fiscal Policy in Oil-Producing Countries

Steven Barnett and Rolando Ossowski

No 2002/177, IMF Working Papers from International Monetary Fund

Abstract: Oil-producing countries face challenges arising from the fact that oil revenue is exhaustible, volatile, and uncertain, and largely originates from abroad. Reflecting these challenges, the paper proposes some important general principles for the formulation and assessment of fiscal policy in these countries. The main findings can be summarized in some key guidelines: the non-oil balance should feature prominently in the formulation of fiscal policy; it should generally be adjusted gradually; the government should strive to accumulate substantial financial assets over the period of oil production; and, where necessary, strategies should aim at breaking procyclical fiscal responses to volatile oil prices.

Keywords: WP; oil price; oil revenue; oil deficit; government spending; exchange rate; Oil; petroleum; fiscal policy; oil-producing countries; nonrenewable resources; fiscal sustainability; understanding fiscal policy development; fiscal policy discussion; oil price volatility; spot oil price; non-oil deficit; fiscal policy decision; oil price decline; oil price development; fiscal policy response; price movement; Oil prices; gas and mining taxes (search for similar items in EconPapers)
Pages: 35
Date: 2002-10-01
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Citations: View citations in EconPapers (50)

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