Debt Sustainability Public Investment And Natural Resources In Developing Countries The Dignar Model

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Debt Sustainability, Public Investment, and Natural Resources in Developing Countries: the DIGNAR Model

Mr. Giovanni Melina,Ms. Shu-Chun S. Yang,Luis-Felipe Zanna
Debt Sustainability Public Investment and Natural Resources in Developing Countries the DIGNAR Model Book PDF

Author : Mr. Giovanni Melina,Ms. Shu-Chun S. Yang,Luis-Felipe Zanna
Publisher : International Monetary Fund
Page : 41 pages
File Size : 49,9 Mb
Release : 2014-04-01
Category : Business & Economics
ISBN : 9781475521078

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Debt Sustainability, Public Investment, and Natural Resources in Developing Countries: the DIGNAR Model by Mr. Giovanni Melina,Ms. Shu-Chun S. Yang,Luis-Felipe Zanna Pdf

This paper presents the DIGNAR (Debt, Investment, Growth, and Natural Resources) model, which can be used to analyze the debt sustainability and macroeconomic effects of public investment plans in resource-abundant developing countries. DIGNAR is a dynamic, stochastic model of a small open economy. It has two types of households, including poor households with no access to financial markets, and features traded and nontraded sectors as well as a natural resource sector. Public capital enters production technologies, while public investment is subject to inefficiencies and absorptive capacity constraints. The government has access to different types of debt (concessional, domestic and external commercial) and a resource fund, which can be used to finance public investment plans. The resource fund can also serve as a buffer to absorb fiscal balances for given projections of resource revenues and public investment plans. When the fund is drawn down to its minimal value, a combination of external and domestic borrowing can be used to cover the fiscal gap in the short to medium run. Fiscal adjustments through tax rates and government non-capital expenditures—which may be constrained by ceilings and floors, respectively—are then triggered to maintain debt sustainability. The paper illustrates how the model can be particularly useful to assess debt sustainability in countries that borrow against future resource revenues to scale up public investment.

Natural Gas, Public Investment and Debt Sustainability in Mozambique

Mr.Giovanni Melina,Yi Xiong
Natural Gas Public Investment and Debt Sustainability in Mozambique Book PDF

Author : Mr.Giovanni Melina,Yi Xiong
Publisher : International Monetary Fund
Page : 37 pages
File Size : 48,8 Mb
Release : 2013-12-23
Category : Business & Economics
ISBN : 9781484326404

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Natural Gas, Public Investment and Debt Sustainability in Mozambique by Mr.Giovanni Melina,Yi Xiong Pdf

Mozambique has great potential in natural gas reserves and if liquefied/commercialized the sum of taxes and other fiscal revenue from natural gas will, at its peak, reach roughly one third of total fiscal revenue. Recent developments in the natural resource sector have triggered a fresh round of much needed infrastructure investment. This paper uses the DIGNAR model to simulate alternative public investment scaling-up plans in alternative LNG market scenarios. Results show that while a conservative approach, which simply awaits LNG revenues, would miss significant current growth opportunities, an aggressive approach would likely meet absorptive capacity constraints and imply a much bigger (and, in an adverse scenario, unsustainable) build-up of public debt. A gradual scaling up approach represents indeed a desirable path, as it allows anticipating some, though not all, of the LNG revenue and, even in an adverse scenario, keeping public debt at sustainable levels. Structural reforms affecting selection, governance and execution of public investment projects would significantly enhance the extent to which public capital is accumulated and impact non-resource growth and, ultimately, debt sustainability.

Public Debt in Developing Countries

Indermit Singh Gill,Brian Pinto
Public Debt in Developing Countries Book PDF

Author : Indermit Singh Gill,Brian Pinto
Publisher : World Bank Publications
Page : 43 pages
File Size : 45,8 Mb
Release : 2005
Category : Debts, Public
ISBN : 8210379456XXX

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Public Debt in Developing Countries by Indermit Singh Gill,Brian Pinto Pdf

"Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This applies not just to countries with a history of high inflation and past default, but also to those in East Asia, with a long tradition of prudent macroeconomic policies and rapid growth. The authors examine why with the help of a conceptual framework drawn from the growth, capital flows, and crisis literature for developing countries with access to the international capital markets (market access countries or MACs). They find that, while the chances of another generalized debt crisis have receded since the turbulence of the late 1990s, sovereign debt is indeed constraining growth in MACs, especially those with debt sustainability problems ... " -- Cover verso.

Public Investment in Resource-Abundant Developing Countries

Mr.Andrew Berg,Rafael Portillo,Ms.Susan S. Yang,Luis-Felipe Zanna
Public Investment in Resource Abundant Developing Countries Book PDF

Author : Mr.Andrew Berg,Rafael Portillo,Ms.Susan S. Yang,Luis-Felipe Zanna
Publisher : International Monetary Fund
Page : 48 pages
File Size : 50,9 Mb
Release : 2012-11-15
Category : Business & Economics
ISBN : 9781475549829

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Public Investment in Resource-Abundant Developing Countries by Mr.Andrew Berg,Rafael Portillo,Ms.Susan S. Yang,Luis-Felipe Zanna Pdf

Natural resource revenues provide a valuable source to finance public investment in developing countries, which frequently face borrowing constraints and tax revenue mobilization problems. This paper develops a dynamic stochastic small open economy model to analyze the macroeconomic effects of investing natural resource revenues, making explicit the role of pervasive features in these countries including public investment inefficiency, absorptive capacity constraints, Dutch disease, and financing needs to sustain capital. Revenue exhaustibility raises medium-term issues of how to sustain capital built during a windfall, while revenue volatility raises short-term concerns about macroeconomic instability. Using the model, country applications show how combining public investment with a resource fund---a sustainable investing approach---can help address the macroeconomic problems associated with both exhaustibility and volatility. The applications also demonstrate how the model can be used to determine the appropriate magnitude of the investment scaling-up (accounting for the financing needs to sustain capital) and the adequate size of a stabilization fund (buffer).

DIGNAR-19 Toolkit Manual

Mr. Zamid Aligishiev,Mr. Giovanni Melina,Luis-Felipe Zanna
DIGNAR 19 Toolkit Manual Book PDF

Author : Mr. Zamid Aligishiev,Mr. Giovanni Melina,Luis-Felipe Zanna
Publisher : International Monetary Fund
Page : 36 pages
File Size : 47,8 Mb
Release : 2021-06-23
Category : Business & Economics
ISBN : 9781513583242

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DIGNAR-19 Toolkit Manual by Mr. Zamid Aligishiev,Mr. Giovanni Melina,Luis-Felipe Zanna Pdf

This note is a user’s manual for the DIGNAR-19 toolkit, an application aimed at facilitating the use of the DIGNAR-19 model by economists with no to little knowledge of Matlab and Dynare via a user-friendly Excel-based interface. he toolkit comprises three tools—the simulation tool, the graphing tool, and the realism tool—that translate the contents of an Excel input file into instructions for Matlab/Dynare programs. These programs are executed behind the scenes. Outputs are saved in a separate Excel file and can also be visualized in customizable charts.

Some Policy Lessons from Country Applications of the DIG and DIGNAR Models

Daniel Gurara,Mr.Giovanni Melina,Luis-Felipe Zanna
Some Policy Lessons from Country Applications of the DIG and DIGNAR Models Book PDF

Author : Daniel Gurara,Mr.Giovanni Melina,Luis-Felipe Zanna
Publisher : International Monetary Fund
Page : 45 pages
File Size : 41,5 Mb
Release : 2019-03-18
Category : Business & Economics
ISBN : 9781498304535

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Some Policy Lessons from Country Applications of the DIG and DIGNAR Models by Daniel Gurara,Mr.Giovanni Melina,Luis-Felipe Zanna Pdf

Over the past seven years, the DIG and DIGNAR models have complemented the IMF and World Bank debt sustainability framework (DSF) analysis, over 65 country applications. They have provided useful insights in the context of program and surveillance work, based on qualitative and quantitative analysis of the macroeconomic effects of public investment scaling-ups. This paper takes stock of the model applications and extensions, and extract five common policy lessons from the universe of country cases. First, improving public investment efficiency and/or raising the rate of return of public projects raises growth and lowers the risks associated with debt sustainability. Second, prudent and gradual investment scaling-ups are preferable to aggressive front-loaded ones, in terms of private sector crowding-out effects, absorptive capacity constraints, and debt sustainability risks. Third, domestic revenue mobilization helps create fiscal space for investment scaling-ups, by effectively containing public debt surges and their later-on repayments. Fourth, aid smoothens fiscal adjustments associated with public investment increases and may lower the risks of unsustainable debt. Fifth, external savings mitigate Dutch disease macroeconomic effects and serve as fiscal buffers. The paper also discusses how these models were used to estimate the quantitative macro economic effects associated with these lessons.

Public Investment Scaling-up and Debt Sustainability

Ahmed El-Ashram
Public Investment Scaling up and Debt Sustainability Book PDF

Author : Ahmed El-Ashram
Publisher : International Monetary Fund
Page : 31 pages
File Size : 42,7 Mb
Release : 2017-06-12
Category : Business & Economics
ISBN : 9781484302453

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Public Investment Scaling-up and Debt Sustainability by Ahmed El-Ashram Pdf

The question of how scaling up public investment could affect fiscal and debt sustainability is key for countries needing to fill infrastructure gaps and build resilience. This paper proposes a bottom-up approach to assess large public investments that are potentially self-financing and reflect their impact in macro-fiscal projections that underpin the IMF’s Debt Sustainability Analysis Framework. Using the case of energy sector investments in Caribbean countries, the paper shows how to avoid biases against good projects that pay off over long horizons and ensure that transformative investments are not sacrificed to myopic assessments of debt sustainability risks. The approach is applicable to any macro-critical investment for which user fees can cover financing costs and which has the potential to raise growth without crowding-out.

How Public Investment Could Help Strengthen Iran’s Growth Potential: Issues and Options

Amir Sadeghi
How Public Investment Could Help Strengthen Iran s Growth Potential Issues and Options Book PDF

Author : Amir Sadeghi
Publisher : International Monetary Fund
Page : 25 pages
File Size : 51,6 Mb
Release : 2018-06-08
Category : Business & Economics
ISBN : 9781484345139

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How Public Investment Could Help Strengthen Iran’s Growth Potential: Issues and Options by Amir Sadeghi Pdf

Public investment is key to growth in developing oil-exporting countries and oil revenue is an important source of finance for public investment. Assessing the growth impact of public investment in Iran under various investment scaling-up (gradual, aggressive, and conservative) and oil price (baseline and adverse) scenarios, this paper shows that because of absorptive capacity constraint and investment inefficiency the growth outcome of an aggressive investment scaling-up is not significantly different from a conservative or a gradual scenario while its costs, in terms of fiscal adjustment, are significantly higher, especially during low oil price periods. An improvement in investment efficiency has a significant positive impact on growth outcome and leads to higher private consumption and investment. Using an oil fund, on the other hand, can help contain the size of fiscal adjustments, although it would result in a larger appreciation of real exchange rate and deterioration in the current account balance.

From Natural Resource Boom to Sustainable Economic Growth

Pranav Gupta,Ms.Bin Li,Jiangyan Yu
From Natural Resource Boom to Sustainable Economic Growth Book PDF

Author : Pranav Gupta,Ms.Bin Li,Jiangyan Yu
Publisher : International Monetary Fund
Page : 31 pages
File Size : 46,6 Mb
Release : 2015-04-30
Category : Business & Economics
ISBN : 9781475570632

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From Natural Resource Boom to Sustainable Economic Growth by Pranav Gupta,Ms.Bin Li,Jiangyan Yu Pdf

Some resource-rich developing countries are in the process of harnessing immense mining resources towards inclusive growth and prosperity. Nevertheless, tapping into natural resources could be challenging given the large front-loaded investment, volatile capital flows and exposure to global commodity markets. Public investment is needed to remove the often-large infrastructure gap and unlock the economic potential. However, too rapid fiscal outlays could push the economy to its limit of absorptive capacity and increase macro-financial vulnerabilities. This paper utilizes a structural model-based approach to analyze macroeconomic impacts of different public investment strategies on key fiscal and non-fiscal variables such as debt, consumption, sovereign wealth fund, and real exchange rates. We apply the model to Mongolia and draw policy recommendations from the analysis. We find that fiscal policy adjustment, particularly moderating infrastructure investment and optimizing investment efficiency is needed to maintain macroeconomic and external stability, as well as to boost the long-term sustainable growth for Mongolia.

Public Investment in a Developing Country Facing Resource Depletion

Adrian Alter,Matteo Ghilardi,Ms.Dalia Hakura
Public Investment in a Developing Country Facing Resource Depletion Book PDF

Author : Adrian Alter,Matteo Ghilardi,Ms.Dalia Hakura
Publisher : International Monetary Fund
Page : 35 pages
File Size : 53,8 Mb
Release : 2015-11-10
Category : Business & Economics
ISBN : 9781513597577

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Public Investment in a Developing Country Facing Resource Depletion by Adrian Alter,Matteo Ghilardi,Ms.Dalia Hakura Pdf

This paper analyzes the tradeoffs between savings, debt and public investment in the Republic of Congo, a developing country with looming oil exhaustibility concerns. Our results highlight the risks to fiscal and capital sustainability of oil exporting countries from large scaling-up in public investment and oil price volatility in view of a projected decline in the oil revenue to GDP ratio. However, structural reforms that improve the efficiency of public investment can allow for a relatively faster buildup of sustainable public capital and sustain higher non-oil growth without adversely affecting the debt ratio or savings. Moreover, we show that even if a government pursues prudent fiscal policy that preserves resource wealth and debt sustainability in the face of exhaustible and volatile resource revenues, low public investment quality in the form of a misallocation of resources can hinder attainment of sustainable public capital and positive non-oil growth.

Botswana

International Monetary Fund. African Dept.
Botswana Book PDF

Author : International Monetary Fund. African Dept.
Publisher : International Monetary Fund
Page : 70 pages
File Size : 46,7 Mb
Release : 2016-04-11
Category : Business & Economics
ISBN : 9781484323489

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Botswana by International Monetary Fund. African Dept. Pdf

This paper presents an overview of Botswana’s economy. Botswana’s diamond endowment—along with its track record of good macroeconomic policy management and political stability—contributed to high average economic growth and strong fiscal and balance-of-payments positions in recent years. Despite these achievements, Botswana faces unemployment, water and electricity shortages, and inefficiency of government operations. These challenges need to be addressed. Real GDP growth is estimated to be negative in 2015 owing to a decrease in global demand for diamonds and a deceleration of activity in the non-mining sector. However, the economy is expected to recover gradually in next three years driven by a gradual pick up in diamond prices and fiscal stimulus.

Debt, Investment, and Growth in Developing Countries with Segmented Labor Markets

Mr.Edward F Buffie,Luis-Felipe Zanna,Mr.Christopher S Adam,Lacina Balma,Dawit Tessema,Mr.Kangni R Kpodar
Debt Investment and Growth in Developing Countries with Segmented Labor Markets Book PDF

Author : Mr.Edward F Buffie,Luis-Felipe Zanna,Mr.Christopher S Adam,Lacina Balma,Dawit Tessema,Mr.Kangni R Kpodar
Publisher : International Monetary Fund
Page : 95 pages
File Size : 46,5 Mb
Release : 2020-06-19
Category : Business & Economics
ISBN : 9781513545639

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Debt, Investment, and Growth in Developing Countries with Segmented Labor Markets by Mr.Edward F Buffie,Luis-Felipe Zanna,Mr.Christopher S Adam,Lacina Balma,Dawit Tessema,Mr.Kangni R Kpodar Pdf

We introduce a new suite of macroeconomic models that extend and complement the Debt, Investment, and Growth (DIG) model widely used at the IMF since 2012. The new DIG-Labor models feature segmented labor markets, efficiency wages and open unemployment, and an informal non-agricultural sector. These features allow for a deeper examination of macroeconomic and fiscal policy programs and their impact on labor market outcomes, inequality, and poverty. The paper illustrates the model's properties by analyzing the growth, debt, and distributional consequences of big-push public investment programs with different mixes of investment in human capital and infrastructure. We show that investment in human capital is much more effective than investment in infrastructure in promoting long-run economic development when investments earn their average estimated returns. The decision about how much to invest in human capital versus infrastructure involves, however, an acute intertemporal trade-off. Because investment in education affects labor productivity with a long lag, it takes 15+ years before net national income, the private capital stock, real wages for the poor, and formal sector employment surpass their counterparts in a program that invests mainly in infrastructure. The ranking of alternative investment programs depends on the policymakers' social discount rate and on the weight of distributional objectives in the social welfare function.

Burkina Faso

International Monetary Fund. African Dept.
Burkina Faso Book PDF

Author : International Monetary Fund. African Dept.
Publisher : International Monetary Fund
Page : 23 pages
File Size : 53,8 Mb
Release : 2016-12-22
Category : Business & Economics
ISBN : 9781475562590

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Burkina Faso by International Monetary Fund. African Dept. Pdf

This Selected Issues paper examines the impact of scaled-up public investment in Burkina Faso. The results suggest that “big-push” investment efforts, while designed to accelerate growth, are likely to run up against significant absorption-capacity constraints. These constraints will diminish the efficiency of investment spending and result in lower public capital accumulation and productivity growth than under a more measured approach. The empirical evidence from the experience of many countries also suggests that the results of aggressive scaling-up initiatives are mixed.

The New Frontiers of Sovereign Investment

Malan Rietveld,Perrine Toledano
The New Frontiers of Sovereign Investment Book PDF

Author : Malan Rietveld,Perrine Toledano
Publisher : Columbia University Press
Page : 290 pages
File Size : 48,6 Mb
Release : 2017-05-16
Category : Business & Economics
ISBN : 9780231543484

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The New Frontiers of Sovereign Investment by Malan Rietveld,Perrine Toledano Pdf

Sovereign wealth funds (SWFs) can be effective tools for national resources revenue management. These state-owned investments, funded by commodity exports, foreign exchange reserves, or other national assets, are adaptable to the challenges posed by financial shocks and have been successfully employed in an increasing number of countries. The number of SWFs continues to grow, with the largest funds managing trillions of dollars in assets among them. However, given the significant variations among SWFs, it can be difficult to compare funds that differ in size, scope, and mandate. This book provides a sorely needed practical look at how these funds work—and how they should work. The New Frontiers of Sovereign Investment combines the insights and experience of academic economists and practitioners from several funds to survey a diverse financial landscape and establish the challenging topical questions facing a broad range of SWFs today: Should they serve both economic development and financial returns, and how? Will responsible investment enhance long-term returns? How can fiscal rules for SWFs be improved to meet emerging economic challenges? The book considers these questions as they apply to both long-established and newer SWFs. Featuring contributions from sovereign wealth practitioners from Alberta's AIMCo, the Nigerian Sovereign Investment Authority, and the New Zealand Superannuation Fund, as well as analysis by scholars at the forefront of sovereign investment, this volume provides timely and much-needed information on these rapidly evolving institutions.

Mongolia

International Monetary Fund. Asia and Pacific Dept
Mongolia Book PDF

Author : International Monetary Fund. Asia and Pacific Dept
Publisher : International Monetary Fund
Page : 89 pages
File Size : 55,7 Mb
Release : 2015-04-30
Category : Business & Economics
ISBN : 9781484346341

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Mongolia by International Monetary Fund. Asia and Pacific Dept Pdf

This 2015 Article IV Consultation highlights that Mongolia’s medium- to long-term prospects are promising given its large natural resources. In the near term, however, the country continues to face balance-of-payments (BOP) pressures on account of low foreign direct investment and weak commodity prices, as well as expansionary macro policies. Imports have now started to taper off and, with the first phase of the Oyu Tolgoi copper and gold mine now in operation, exports have picked up. The trade balance has thus improved, but the overall BOP remains weak. The executive directors have supported ongoing efforts to foster high, inclusive growth by improving the investment climate, enhancing competitiveness, and promoting economic diversification.