Future Fiscal Adjustments and Debt Sustainability

Weshah Razzak

MPRA Paper from University Library of Munich, Germany

Abstract: We estimate a VAR, which summarizes the dynamics of five variables, the real price of oil, the long-run real interest rate, real GDP, the primary fiscal balance-GDP, and debt-GDP. We make dynamic stochastic projections and use the data to compute the annual primary fiscal balance required to achieve a particular debt-GDP target over the period from the end of the sample in 2018 to 2024. For Oman to achieve a debt-GDP target between 60 to 20 percent in 2024, it has to increase its annual primary fiscal balance by about OR 4 Billion (USD 10.4 Billion) either by increasing revenues, decrease expenditures, or both. This figure increases substantially if Oman wants to achieve the target earlier than 2024.

Keywords: External debt; fiscal balance; fiscal adjustment (search for similar items in EconPapers)
JEL-codes: E6 E62 H6 (search for similar items in EconPapers)
Date: 2020-10-08
New Economics Papers: this item is included in nep-mac
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