Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy: Lessons from Gabon

Consequences of lower oil prices and stranded assets for Russia's sustainable fiscal stance

“…Let a t denote net government assets (gross assets minus liabilities) as fraction of national income at the end of period t, g t primary government spending (excluding net interest payments) as fraction of national income,  t the non-oil/gas tax rate, and n t oil 5 A more general framework would make public spending endogenous and analyse the trade-off between using windfalls to boost public spending or cut tax rates and allow for a non-oil/gas tax base that depends on the business cycle by including the effects of an output gap in the government budget constraint (Harding and van der Ploeg, 2013). Allowing for habit persistence implies that society gets hooked on high public and private consumption during a windfall, but finds it tough to cut consumption after the windfall has ceased (Leigh and Olters, 2006;Olters, 2007). If habits last forever, the non-oil/gas primary deficit follows a random walk if public spending does not change.…”

A Public Financial Management Framework for Resources-Producing Countries

“…Timor-Leste's relative positive outcomes reflect a high degree of ownership by the authorities and their intention to use the PIH in a flexible way (see Daniel and others, 2003). São Tomé and Príncipe (Segura, 2006, andKim, 2005) also uses the PIH, which is enshrined in special legislation, and has been proposed for Gabon (Leigh and Olters, 2006), and Trinidad and Tobago (Velculescu and Rizavi, 2005).…”

Sovereign Risk and Asset and Liability Management-Conceptual Issues

“…For commodity-exporting countries, the SALM approach can highlight the potential asset management challenges that stem from a medium-term fiscal strategy (Leigh and Olters, 2006). For example, high commodity prices lead to higher revenues, concurrently strengthening their (unadjusted) fiscal positions.…”