Measures of Fiscal Risk in Hydrocarbon-Exporting Countries

23 Pages Posted: 19 Dec 2012

See all articles by Carlos Caceres

Carlos Caceres

International Monetary Fund (IMF)

Leandro Medina

George Washington University - Department of Economics; International Monetary Fund (IMF) - Western Hemisphere Department

Multiple version iconThere are 2 versions of this paper

Date Written: October 2012

Abstract

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. 

Keywords: Fiscal risk, Oil exporting countries, Hydrocarbons, Oil prices, Commodity price fluctuations, Fiscal policy, oil prices, stochastic simulations, oil prices, volatility, break-even prices., fiscal risk, exporting countries, fiscal policy, commodity prices, price fluctuations, fiscal risks, fiscal deficit, public finances, fiscal stance, fiscal accounts, tax rates, fiscal responsibility, fiscal positions, trade shocks, dynamic effects, fiscal stances, fiscal vulnerabilities, government spending, tax base, fiscal policy responses, public spending, fiscal outcomes, fiscal balances, level of expenditures, public debt, fiscal expenditures, fiscal revenues, fiscal position, fiscal responsibility la

JEL Classification: C53, G17, H60, Q38

Suggested Citation

Caceres, Carlos and Medina, Leandro, Measures of Fiscal Risk in Hydrocarbon-Exporting Countries (October 2012). IMF Working Paper No. 12/260, Available at SSRN: https://ssrn.com/abstract=2191311

Carlos Caceres

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Leandro Medina

George Washington University - Department of Economics ( email )

Monroe Hall, Suite 340
2115 G Street, NW
Washington, DC 20052
United States

International Monetary Fund (IMF) - Western Hemisphere Department

700 19th Street NW
Washington, DC 20431
United States

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