Publication: Fiscal Vulnerabilities in Commodity Exporting Countries and the Role of Fiscal Policy
Date
2019-07
ISSN
Published
2019-07
Author(s)
Richaud, Christine
Galego Mendes Galego, Arthur
Ayivodji, Firmin
Matta, Samer
Essl, Sebastian
Abstract
The paper updates the analysis of the
fiscal policy response over the recent commodity cycle,
contributes to the analysis of key drivers of fiscal policy
procyclicality, and provides a stock-tacking of current
fiscal vulnerabilities. Countercyclical fiscal policy during
good times has been a key factor affecting the ability of
commodity exporters to sustainably support economic activity
when prices started declining. Fiscal space to withstand the
next shock has narrowed in many emerging and developing
economies (EMDEs) and may also be constrained by contingent
liabilities stemming from exposure of state-owned
enterprises and public and systemic banks to the
commodity-sector. Fiscal consolidation is still necessary in
many commodity-exporting EMDEs to reduce debt risks, rebuild
fiscal and external buffers, and facilitate access to
affordable financing. Fiscal policy should particularly aim
at reducing the high volatility of public investment
spending in commodity-exporting countries, both in good and
bad times.
Citation
“Richaud, Christine; Galego Mendes Galego, Arthur; Ayivodji, Firmin; Matta, Samer; Essl, Sebastian. 2019. Fiscal Vulnerabilities in Commodity Exporting Countries and the Role of Fiscal Policy; Fiscal Vulnerabilities in Commodity Exporting Countries and the Role of Fiscal Policy. MTI Discussion Paper;No. 15. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/32180 License: CC BY 3.0 IGO.”