Chapter 3. Macroeconomic Policy Challenges
Author:
Mrs. Harinder K Malothra
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,
Mr. Milan M Cuc
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Mr. Ulrich Bartsch
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Mr. Menachem Katz
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Language:
English
Print Publication Date:
23 Jan 2004
Keywords:
ISI; SI; oil-producing country; government; country; revenue; revenue shortfall; oil export revenue; consumption pattern; oil price development; national wealth; Oil; gas and mining taxes

Abstract

Macroeconomic policy in oil countries faces challenges arising from three characteristics of oil revenue: (1) oil revenue is more volatile than revenue from other export commodities because of international market conditions; (2) oil revenue is a foreign exchange inflow, and its use can have large effects on macroeconomic stability and economic structure; and (3) oil is an exhaustible resource with a finite revenue stream. The challenge of macroeconomic policy in SSA oil countries is to stabilize budgetary expenditures and sterilize excess revenue inflows in the context of medium- to long-term sustainability considerations, and thereby provide an environment conducive to growth and poverty reduction. In most of the oil-producing countries, there has been a strong deficit bias, and a procyclical fiscal policy has been driven by oil price developments.

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Cover Lifting the Oil Curse
Lifting the Oil Curse
Improving Petroleum Revenue Management in Sub-Saharan Africa
ISBN:
9781589063174
Publication Date:
23 Jan 2004
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063174.058
Pages:
73

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