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Oil Revenue Assignments: Country Experiences and Issues

Author

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  • Mr. Eric Mottu
  • Mr. Ehtisham Ahmad

Abstract

Based on country experiences, the paper assesses policy options to assign oil revenues to subnational governments (SNGs). The literature recommends that oil revenues be centralized. Given political economy considerations, this paper suggests that a possible alternative is to assign stable oil-tax bases to oil-producing SNGs, supplementing these with predictable transfers from the center. Although commonly used, oil revenue-sharing arrangements are the least preferable solution, as they complicate macroeconomic management and do not provide stable financing. Revenue sharing also does not diffuse separatist tendencies, since oil-producing SNGs would still be better off by keeping their oil revenues in full.

Suggested Citation

  • Mr. Eric Mottu & Mr. Ehtisham Ahmad, 2002. "Oil Revenue Assignments: Country Experiences and Issues," IMF Working Papers 2002/203, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/203
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    References listed on IDEAS

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    1. Mr. Rolando Ossowski & Mr. Steven A Barnett & Mr. James Daniel & Mr. Jeffrey M. Davis, 2001. "Stabilization and Savings Funds for Nonrenewable Resources," IMF Occasional Papers 2001/004, International Monetary Fund.
    2. International Monetary Fund, 2002. "Indonesia: Selected Issues," IMF Staff Country Reports 2002/154, International Monetary Fund.
    3. Mr. Ehtisham Ahmad & Mr. Ali M. Mansoor, 2002. "Indonesia: Managing Decentralization," IMF Working Papers 2002/136, International Monetary Fund.
    4. McLure, Charles E. Jr., 2001. "The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 339-64, June.
    5. Jorge Martinez-Vasquez & Jameson Boex, 2001. "Russia's Transition to a New Federalism," World Bank Publications - Books, The World Bank Group, number 15248.
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    Cited by:

    1. Mr. Ehtisham Ahmad & Mr. Raju J Singh, 2003. "Political Economy of Oil-Revenue Sharing in a Developing Country: Illustrations from Nigeria," IMF Working Papers 2003/016, International Monetary Fund.
    2. Ansari, Dawud, 2016. "Resource curse contagion in the case of Yemen," Resources Policy, Elsevier, vol. 49(C), pages 444-454.
    3. Jean-Denis Garon & Charles Séguin, 2021. "Environmental Tax Reform in a Federation with Rent-Induced Migration," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(3), pages 487-519, March.
    4. Tromben, Varinia & Jiménez, Juan Pablo, 2006. "Fiscal policy and the commodities boom: the impact of higher prices for non-renewables in Latin America and the Caribbean," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    5. Aleksandrov, Nikolay & Espinoza, Raphael & Gyurkó, Lajos, 2013. "Optimal oil production and the world supply of oil," Journal of Economic Dynamics and Control, Elsevier, vol. 37(7), pages 1248-1263.
    6. Mr. Nikolay Aleksandrov & Mr. lajos Gyurko & Mr. Raphael A Espinoza, 2012. "Optimal Oil Production and the World Supply of Oil," IMF Working Papers 2012/294, International Monetary Fund.
    7. Diao, Xinshen & Nwafor, Manson & Alpuerto, Vida & Akramov, Kamiljon & Salau, Sheu, 2010. "Agricultural growth and investment options for poverty reduction in Nigeria," IFPRI discussion papers 954, International Food Policy Research Institute (IFPRI).
    8. Hjort, Jonas, 2006. "Citizen funds and Dutch Disease in developing countries," Resources Policy, Elsevier, vol. 31(3), pages 183-191, September.
    9. Leonardo G. Romeo & Mohamed El Mensi, 2011. "The Difficult Road to Local Autonomy in Yemen: Decentralization Reforms between Political Rationale and Bureaucratic Resistances in a Multi-party Democracy of the Arabian Peninsula," Chapters, in: Jorge Martinez-Vazquez & François Vaillancourt (ed.), Decentralization in Developing Countries, chapter 15, Edward Elgar Publishing.
    10. Grant Bishop & Anwar Shah, 2008. "Fiscal Federalism and Petroleum Resources in Iraq," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0826, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. repec:spa:wpaper:2014wpecon03 is not listed on IDEAS
    12. Lauro Carnicelli & Fernando Antonio Slaibe Postali, 2014. "Oil windfalls and local fiscal effort: a propensity score analysis," Working Papers, Department of Economics 2014_03, University of São Paulo (FEA-USP).
    13. Alpuerto, Vida & Diao, Xinshen & Salau, Sheu & Nwafor, Manson, 2009. "Agricultural investment for growth and poverty reduction in Nigeria:," NSSP working papers 1, International Food Policy Research Institute (IFPRI).
    14. Baja Daza, Gover & Villarroel Böhrt, Sergio & Zavaleta Castellón, David, 2012. "Diseño institucional e incentivos implicitos en la descentralización Boliviana (1994-2008) [Institutional design and implicit incentives in Bolivia's decentralization model (1994-2008)]," MPRA Paper 48598, University Library of Munich, Germany.
    15. Mr. Atsushi Iimi, 2006. "Did Botswana Escape from the Resource Curse?," IMF Working Papers 2006/138, International Monetary Fund.
    16. Jorge Martinez-Vazquez & François Vaillancourt (ed.), 2011. "Decentralization in Developing Countries," Books, Edward Elgar Publishing, number 14175.

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