Harnessing Resource Wealth for Inclusive Growth in Fragile States

Corinne Delechat, John Clark JR, Pranav Gupta, Malangu Kabedi-Mbuyi, Mesmin Koulet-Vickot, Carla Macario, Toomas Orav, Manuel Rosales Torres, René Tapsoba, Dmitry Zhdankin and Susan Yang

No 2015/025, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; resource revenue; natural resource; MRU country; investment efficiency; revenue profile; Natural resources; West Africa; fragile states; social safety nets; inclusive growth; investment path; public investment; Public investment spending; Debt sustainability; Consumption taxes; Private consumption; Sub-Saharan Africa (search for similar items in EconPapers)
Pages: 54
Date: 2015-02-11
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Citations: View citations in EconPapers (2)

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