Designing Oil Revenue Management Mechanisms : An Application to Chad
Oil resources usually play a significant role in oil-rich countries, in gross domestic product and government revenues. High dependence of government revenues on oil can contribute to severe recession following an adverse commodity price shock, suc...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/418491600369375091/Designing-Oil-Revenue-Management-Mechanisms-An-Application-to-Chad http://hdl.handle.net/10986/34500 |
| Summary: | Oil resources usually play a significant
role in oil-rich countries, in gross domestic product and
government revenues. High dependence of government revenues
on oil can contribute to severe recession following an
adverse commodity price shock, such as in 2014. This paper
examines the extent to which a fiscal rule or stabilization
fund could translate into a less pro-cyclical fiscal policy,
with the government saving part of its oil revenues during
periods of high prices and drawing down on the savings
during difficult periods. Using the macro-structural model
MFMod, the paper presents, evaluates, and discusses the
strengths and weaknesses of different oil revenue management
mechanisms applied to the specific case of Chad. The
scenarios demonstrate that a well-designed management rule
can successfully insulate the public budget from the oil
price cycle, resulting in a significant reduction in the
volatility of the economy. |
|---|