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Ms. May Y Khamis and Mr. Abdelhak S Senhadji

Prize or Penalty: When Sports Help Economies Score" looks at why countries vie to host the world's most costly sporting events. And, in a series of articles on "After the Crisis," we discuss why some countries were hit harder than others; how were shocks transmitted round the world, and whether protectionist pressures might intensify in 2010. As usual, we take on a number of hot topics, including housing prices, bankers' bonuses, Ponzi schemes, and inflation targeting. In "Picture This" we see that the number of hungry is on the rise, topping 1 billion. Our regular "People in Economics" column profiles Daron Acemoglu, the Turkish-born intellectual who won the American Economic Association's award in 2005 for the most influential U.S. economist under the age of 40. "Back to Basics" explains inflation; and "Data Spotlight" looks at how dollarization is declining in Latin America. Also includes articles by Nick Stern on climate change and Simon Johnson on bonuses and the "doomsday cycle

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

A country with large exhaustible resources such as oil can benefit substantially from them, but the revenues from exploiting these resources can pose challenges. Fiscal policymakers need to decide how expenditure can be planned and insulated from revenue shocks arising from the volatility and unpredictability of resource prices. Decisions also need to be made on the extent to which resources should be saved for future generations.

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

A country with large fiscal revenues derived from exploiting a nonrenewable resource such as oil typically faces two main problems—that the revenue stream is uncertain and volatile, and that it will eventually dry up. NRFs are sometimes proposed to deal with both these problems. First, a fund may be seen as able to stabilize budgetary revenues. When the resource price is “high,” the fund would receive resources, which it would then pay out to the budget when the price is “low.” Second, a fund may be seen as a way to save some of the revenue generated by exploiting the finite stock of the resource, which can then provide income after it has been exhausted. Funds may also be set up for other reasons: to counteract real exchange rate volatility and “Dutch disease,”2 for liquidity and political economy purposes, and to enhance governance and transparency.

Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

Some countries have considered, or turned to, the use of NRFs to address some of the issues discussed above, such as the short-run stabilization and long-run saving challenges posed by nonrenewable resource revenues. The general characteristic of such funds is that they are public sector institutions, separate from the budget, that receive inflows related to the exploitation of a nonrenewable resource.Table 3.1 summarizes the main objectives and design features of selected funds.

International Monetary Fund. Middle East and Central Asia Dept.
This 2015 Article IV Consultation highlights that decline in oil prices has adversely affected Kuwait’s fiscal and current account balances and slowed growth in 2014–15. Real non-oil GDP growth is projected to slow in 2015 and 2016, and pick up to 4 percent in the medium term, supported by government investment in infrastructure and private investment. The fiscal and external positions are projected to deteriorate further in 2015 and 2016, and improve somewhat over the medium term as oil prices and production recover partially.
Abdulrahman K Al-Mansouri and Ms. Claudia H Dziobek
The six member states of the Gulf Cooperation Council (GCC)-Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (UAE)-have laid out a path to a common market by 2007 and monetary union by 2010, based on economic convergence. To monitor convergence and support economic and monetary policy, comparable economic data for member countries and data for the region as a whole will be essential. What is the most efficient way to produce these data? The authors survey the statistical institutions in the GCC countries and present the case for creating "Gulfstat"-a regional statistical agency to operate within a "Gulf States System of Statistics." Valuable lessons can be learned from regional statistical organization in Africa and the European Union-Afristat and Eurostat.
Mr. John Thornton, Fabian Bornhorst, and Mr. Sanjeev Gupta
The recent development literature stresses that countries that receive large revenues from natural resource endowments typically raise less revenue from domestic taxation, and that this creates governance problems because the lower domestic tax effort reduces the incentive for the public scrutiny of government. Our results from a panel of 30 hydrocarbon producing countries indicate that the offset between hydrocarbon revenues and revenues from other domestic sources is about 20 percent but that it is invariant to governance indicators.
Mr. Nigel A Chalk
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.
Samya Beidas-Strom, Weicheng Lian, and Ashwaq Maseeh
This paper examines housing finance and housing price dynamics in selected emerging Middle Eastern economies over the past two decades. It finds that (i) mortgage markets have experienced rapid development, which has led to lower private per capita consumer spending volatility this decade; (ii) a downward price correction occurred in the housing market after 2007, which appears to have bottomed out; (iii) the rental market appears to be largely determined by region-specific economic fundamentals-a youthful working-age population and wealth variables; and (iv) a segregation between self-owned house and rental price dynamics exists in this region, rendering the former more sensitive to the business cycle.
Mr. Rolando Ossowski, Mr. Steven A Barnett, Mr. James Daniel, and Mr. Jeffrey M. Davis

Abstract

The establishment of an NRF requires decisions about its integration within the fiscal framework and its asset-management strategy. Governance, transparency, and accountability issues also need to be addressed.