Fiscal Frameworks for Resource Rich Developing Countries

The 'Fiscal Presource Curse': Giant Discoveries and Debt Sustainability

“…First, because debt crises are associated with large economic and welfare costs (Furceri and Zdzienicka, 2012), and some of these costs tend to increase with the size of haircuts required to restore debt sustainability . Second, it would provide stronger foundations to support the design and implementation of resilient fiscal frameworks and prudent borrowing strategies to counteract the curse (IMF, 2012;Poplawski-Ribeiro et al, 2012). Given the severity of the fiscal presource curse and its potentially large economic and welfare costs, we see scope for top-down and bottom-up policy interventions to mitigate the incidence and severity of the curse, as well as its perverse interaction with institutional weaknesses.…”

Sharing Resource Wealth Inclusively Within and Across Generations

“…However, estimates suggest that complementing Norway's BIH framework with fiscal consolidation targeting a fiscal balance of 5 percent of non-oil GDP by the mid-2020s would make it possible to finance future pensions from the country's oil wealth (Cabezon & Henn, 2020). One important takeaway from Norway's experience is that resource funds are the most effective at promoting fiscal sustainability when they are properly integrated with both the budget and the fiscal anchor, as was stressed by Poplawski-Ribeiro et al (2012).…”

How to Achieve Inclusive Growth

“…However, estimates suggest that complementing Norway's BIH framework with fiscal consolidation targeting a fiscal balance of 5 percent of non-oil GDP by the mid-2020s would make it possible to finance future pensions from the country's oil wealth (Cabezon and Henn 2020). One important takeaway from Norway's experience is that resource funds are the most effective at promoting fiscal sustainability when they are properly integrated with both the budget and the fiscal anchor, as has been stressed by Poplawski-Ribeiro et al (2012).…”