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

Author: Matteo Ruzzante
Publisher: International Monetary Fund
ISBN: 1616358998
Category :
Languages : en
Pages : 77

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Book Description
This paper investigates the dynamic impact of natural resource discoveries on government debt sustainability. We use a 'natural experiment' framework in which the timing of discoveries is treated as an exogenous source of within-country variation. We combine data on government debt, fiscal stress and debt distress episodes on a large panel of countries over 1970-2012, with a global repository of giant oil, gas, and mineral discoveries. We find strong and robust evidence of a 'fiscal presource curse', i.e., natural resources can jeopardize fiscal sustainability even before 'the first drop of oil is pumped'. Specifically, we find that giant discoveries, mostly of oil and gas, lead to permanently higher government debt and, eventually, debt distress episodes, specially in countries with weaker political institutions and governance. This evidence suggest that the curse can be mitigated and even prevented by pursuing prudent fiscal policies and borrowing strategies, strengthening fiscal governance, and implementing transparent and robust fiscal frameworks for resource management.

Author: James Cust
Publisher: World Bank Publications
ISBN: 1464817448
Category : Business & Economics
Languages : en
Pages : 257

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Book Description
This book examines the role for natural resource wealth in driving Africa’s economic transformation and the implications of the low-carbon transition for resource-rich economies. Resource wealth remains central to most Sub-Saharan African economies, and significant untapped potential is in the ground. Subsoil assets—such as metals, minerals, oil, and gas—are key sources of government revenues, export earnings, and development potential in most countries in the Africa region. Despite large reserves, success in converting subsoil wealth into aboveground sustainable prosperity has been limited. Since the decline in commodity prices in 2014, resource-rich Africa has grown more slowly than the region’s average growth rate. Finding ways to more effectively harness natural resource wealth to drive economic transformation will be central to Africa’s economic future. As the world moves away from fossil fuels in alignment with commitments under the Paris Agreement, Africa’s resource-rich countries face new risks and opportunities. Recent estimates suggest that 80 percent of the world’s proven fossil fuel reserves must remain underground to meet the Paris targets, and much of these stranded reserves may be in Africa. This issue of stranded assets and, relatedly, “stranded nations,†? has major implications for the many African economies that are dependent on petroleum extraction and export. On the other hand, the energy transition will increase demand for raw material inputs involved in clean energy technologies. The transition from fossil fuels to clean energy may create demand by 2050 for 3 billion tons of minerals and metals that are needed to deploy solar, wind, and geothermal energy. How can African economies tap into these opportunities while managing the downside risk to their fossil fuel wealth? Africa’s Resource Future explores these themes and offers policy makers insights to help them navigate the coming years of uncertainty.

Author: James Cust
Publisher: World Bank Publications
ISBN: 1464820309
Category : Business & Economics
Languages : en
Pages : 292

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Book Description
Ce livre se penche sur le rôle des richesses en ressources naturelles dans la transformation économique de l’Afrique et évoque les enjeux de la transition sobre en carbone pour les économies riches en ressources. La richesse en ressources constitue en effet un facteur clé dans la majeure partie des économies subsahariennes, dont le sol recèle un important potentiel inexploité. Les gisements souterrains de métaux, minerais, pétrole et gaz représentent des sources prépondérantes de recettes publiques et de revenus d’exportation, tout en offrant des possibilités de développement dans la plupart des pays du continent. En dépit de réserves conséquentes, la conversion de la richesse du sous-sol en prospérité durable n’a pas été pas couronnée de succès. Depuis la baisse du prix des matières premières constaté en 2014, la croissance des pays d’Afrique riches en ressources est plus lente que le taux de croissance moyen observé dans la région. Il est donc vital pour son avenir économique que le continent africain puisse tirer profit de ses richesses en ressources naturelles et ainsi favoriser sa transformation économique. Alors que le monde s’éloigne des combustibles fossiles conformément aux engagements pris dans le cadre de l’Accord de Paris, les pays africains riches en ressources voient surgir de nouveaux risques et de nouvelles opportunités. Des estimations récentes suggèrent que 80 % des réserves de combustibles fossiles attestées dans le monde doivent rester enfouies pour atteindre les objectifs de Paris; or, une grande partie de ces réserves «échouées» se situent en Afrique. Pour les nombreuses économies africaines qui dépendent de l’extraction et de l’exportation du pétrole, cette problématique des actifs «échoués», et par là -même, de «nations échouées», a des implications considérables. Mais cette transition énergétique va également avoir pour effet d’augmenter la demande en intrants de matières premières indispensables aux technologies des énergies vertes. La transition entre combustibles fossiles et énergies vertes devrait ainsi générer une demande de 3milliards de tonnes de minerais et de métaux nécessaires au déploiement des technologies à énergie solaire, éolienne et géothermique. Une question se pose alors: comment les économies africaines peuvent-elles pleinement saisir ces opportunités tout en gérant les risques inhérents aux combustibles fossiles, dans un contexte où leur demande est vouée à décroître? Les ressources naturelles, un enjeu clé pour l’avenir de l’Afrique aborde ces thèmes et offre aux décideurs politiques des pistes pour gérer les écueils de l’incertitude au cours des années à venir.

Author: Hany Besada
Publisher: Taylor & Francis
ISBN: 1003845339
Category : Business & Economics
Languages : en
Pages : 352

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Book Description
The Routledge Handbook of Natural Resource Governance in Africa provides a comprehensive analysis of African natural resource governance, stretching across the continent, and encompassing water, land, extractive resources, and mining. Africa’s natural resources are not only crucial for the continent from an economic, environmental, and political perspective, but they are also of significant geopolitical importance, with direct implication for meeting the global challenges outlined in the Sustainable Development Goals. Whether an abundance of natural resources proves to be a curse or a blessing depends on the nature, extent, and outcome of the effort and experience of an individual country in governing and managing such assets. It is with this in mind that this ground-breaking handbook brings together experts from across the field of natural resource development to reflect on the varied regime types and paradigms within the continent’s natural resource sectors, the specific challenges they face, and their role within global value chains. The book first considers governance for sustainable development and discourses of land and development financing, before going on to investigate the regulatory and policy impacts, and socioeconomic implications of natural resource management. Finally, the Handbook situates the African continent within the emerging global energy transition; examining trends in South-South cooperation, and new frontiers for the harnessing of critical tools in a sustainable future for natural resource governance and management. Overall, the Handbook’s in-depth analysis provides a unique blend of realism and optimism, highlighting the importance of building a new sustainable African resource narrative for shared prosperity. The handbook will be an essential read for researchers and policy makers with an interest in sustainable development and natural resource governance in Africa.

Author: Jean-Marc B. Atsebi
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 75

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Book Description
The literature on the effects of natural resources on education is mixed and inconclusive. In this paper, we adopt an innovative approach by exploring the effects of mineral discoveries and productions on intergenerational educational mobility (IM), linking parents to the children education levels for more than 14 million individuals across 28 African countries and 2,890 districts. We find that mineral discoveries and productions positively affect educational IM for primary education in Africa for individuals exposed to the mineral sites and living in districts with discoveries. Specifically, the probability of upward primary IM increases by 2.7 percentage points (pp.) following mineral discoveries and 6.7 pp. following mineral productions. Downward primary IM decreases by 1.2 pp. following both mineral discoveries and productions. These positive effects are increasing for individuals born later after discoveries and productions, for males, and individuals living in the urban area. However, no significant effects are found for secondary and tertiary educational IM. Finally, we explore the income and returns to education channels through which mineral discoveries and productions affect educational IM.

Author: Ms.Camila Henao Arbelaez
Publisher: International Monetary Fund
ISBN: 1484311051
Category : Business & Economics
Languages : en
Pages : 41

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Book Description
Do government financial assets help improve public debt sustainability? To answer this question, we assemble a comprehensive dataset on government assets using multiple sources and covering 110 advanced and emerging market economies since the late 1980s. We then use this rich database to estimate the impact of assets on two key dimensions of debt sustainability: borrowing costs and the probability of debt distress. Government financial assets significantly reduce sovereign spreads and the probability of debt crises in emerging economies but not in advanced economies, and the effect varies with asset characteristics, notably liquidity. Government finacial assets also help discriminate countries across the distribution of sovereign spreads, thus signaling information about emerging economies’ creditworthiness.

Author: International Monetary Fund. African Dept.
Publisher: International Monetary Fund
ISBN: 1484396294
Category : Social Science
Languages : en
Pages : 46

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Book Description
This Selected Issues paper estimates the macroeconomic impact of these discoveries and discusses potential fiscal frameworks for managing related revenues. Pre-production investment (2019–2021) will lead to an increase in the current account deficit; however, this will be followed by a boost to exports as hydrocarbon production comes online (2022 onward). Discoveries are important but will not lead to a major transformation of the economy, with hydrocarbons expected to make up not more than 5 percent of GDP. Fiscal revenues would average about 1.5 percent of GDP over a 25-year period and about 3 percent of GDP when production peaks. Given the relatively small gains in revenue, IMF staff recommends a fiscal framework that allows for an initial drawdown of government resources to finance large up-front investment needs, followed by an appropriate target level of the non-resource primary balance which is to serve as a medium-term fiscal anchor. Issues related to managing the volatility of resource revenues are also discussed.

Author: Ian Bannon
Publisher: World Bank Publications
ISBN: 9780821355039
Category : Nature
Languages : en
Pages : 432

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Book Description
Research carried out by the World Bank on the root causes of conflict and civil war finds that a developing country's economic dependence on natural resources or other primary commodities is strongly associated with the risk level for violent conflict. This book brings together a collection of reports and case studies that explore what the international community in particular can do to reduce this risk.; The text explains the links between natural resources and conflict and examines the impact of resource dependence on economic performance, governance, secessionist movements and revel financing. It then explores avenues for international action - from financial and resource reporting procedures and policy recommendations to commodity tracking systems and enforcement instruments, including sanctions, certification requirements, aid conditionality, legislative and judicial instruments.

Author: International Monetary Fund. External Relations Dept.
Publisher: International Monetary Fund
ISBN: 1475533756
Category : Business & Economics
Languages : en
Pages : 60

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Book Description
Finance and Development, March 2014

Author: Daniel Lederman
Publisher: World Bank Publications
ISBN: 0821365460
Category : Nature
Languages : en
Pages : 396

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Book Description
'Natural Resources: Neither Course nor Destiny' brings together a variety of analytical perspectives, ranging from econometric analyses of economic growth to historical studies of successful development experiences in countries with abundant natural resources. The evidence suggests that natural resources are neither a curse nor destiny. Natural resources can actually spur economic development when combined with the accumulation of knowledge for economic innovation. Furthermore, natural resource abundance need not be the only determinant of the structure of trade in developing countries. In fact, the accumulation of knowledge, infrastructure, and the quality of governance all seem to determine not only what countries produce and export, but also how firms and workers produce any good.