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Measures of Fiscal Risk in Hydrocarbon-Exporting Countries
Author:
Carlos Caceres
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and
Leandro Medina
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Series:
IMF Working Papers
Volume/Issue:
Volume 2012: Issue 260
Language:
English
Publication Date:
30 Oct 2012
DOI:
https://doi.org/10.5089/9781475530162.001
ISBN:
9781475530162
ISSN:
1018-5941
Pages:
21
Keywords:
WP; price; break-even price; break-even; oil price; Fiscal risk; stochastic simulations; oil prices; volatility; break-even prices; breakeven price; price change; price of oil; spot market; price of Brent; Commodity price fluctuations; Fiscal risks; Futures; Commodity prices; Middle East; North Africa; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The recent relatively high levels of global oil prices have led to a significant improvement in the public finances of several hydrocarbon-exporting countries. However, despite the increase in fiscal buffers, medium-term risks remain high. Fiscal vulnerabilities have increased as a consequence of the substantial spending packages that have been implemented in recent years. This has raised break-even prices—that is, the price levels that ensure that fiscal accounts are in balance at a given level of spending—in these countries. This study analyses such risks and develops measures of fiscal risk stemming from oil price fluctuations. An empirical application to hydrocarbon-exporting countries from the Middle East and North Africa region is included. Additionally, it is noted that countries with large net assets and proven oil reserves are much less vulnerable to fiscal risk than is indicated by standard measures based on break-even prices. 
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund