Ms. Elva Bova, Mr. Paulo A Medas, and Mr. Tigran Poghosyan
Resource-rich countries face large and persistent shocks, especially coming from volatile
commodity prices. Given the severity of the shocks, it would be expected that these countries
adopt countercyclical fiscal policies to help shield the domestic economy. Taking advantage
of a new dataset covering 48 non-renewable commodity exporters for the period 1970-2014,
we investigate whether fiscal policy does indeed play a stabilizing role. Our analysis shows
that fiscal policy tends to have a procyclical bias (mainly via expenditures) and, contrary to
others, we do not find evidence that this bias has declined in recent years. Adoption of fiscal
rules does not seem to reduce procyclicality in a significant way, but the quality of political
institutions does matter. Finally, non-commodity revenues tend to respond only to persistent
changes in commodity prices.
This paper provides deeper insights on a few themes with regard to the experience with macroeconomic management in resource-rich developing countries (RRDCs). First, some stylized facts on the performance of these economies relative to their non-resource peers are provided. Second, the experience of Fund engagement in these economies with respect to surveillance, programs, and technical assistance is assessed. Third, the experience of selected countries with good practices in the management of the natural resource wealth is presented. Fourth, the experience of IMF advice in helping RRDCs set up resource funds is discussed. Finally, the main themes and messages from the IMF staff consultation with external stakeholders (CSOs, policy makers, academics) are presented.