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This paper proposes a framework for assessing fiscal sustainability in heavily indebted countries dependent on exhaustible resources, with reference to Gabon. It finds that fiscal sustainability could be achieved by: (i) developing a fiscal rule for the non-oil primary fiscal balance compatible with an objective for reducing the debt-to-non-oil GDP ratio; (ii) introducing a constant oil-based income transfer per capita allowing intergenerational equity; and (iii) building up an oil savings fund. Long-term simulations show that Gabon's fiscal position is fragile and that a fiscal policy path consistent with the proposed framework could help achieve comfortable levels of net wealth.

Fiscal policy --- Nonrenewable natural resources --- Petroleum --- Coal-oil --- Crude oil --- Oil --- Caustobioliths --- Mineral oils --- Non-renewable natural resources --- Exhaustible resources --- Natural resources, Nonrenewable --- Natural resources --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Economic aspects --- Government policy --- Investments: Energy --- Macroeconomics --- Public Finance --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- Economic History: Macroeconomics --- Growth and Fluctuations: Africa --- Oceania --- Nonrenewable Resources and Conservation: Government Policy --- Fiscal Policy --- Business Taxes and Subsidies --- Energy: General --- Public finance & taxation --- Investment & securities --- Fiscal stance --- Oil, gas and mining taxes --- Public debt --- Fiscal sustainability --- Taxes --- Commodities --- Petroleum industry and trade --- Debts, Public --- Gabon

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The oil price decline creates an opportunity to dismantle energy subsidies, which escalated with high oil prices. This paper assesses energy subsidies in Latin America and the Caribbean—about 1.8 percent of GDP in 2011–13 (approximately evenly split between fuel and electricity), and about 3.8 percent of GDP including negative externalities. Countries with poorer institutions subsidize more. Energy-rich countries subsidize fuel more, but low-income countries are more likely to subsidize electricity, as are Central America and the Caribbean. Energy subsidies impose fiscal costs, hurting SOEs, competitiveness, and distribution. The paper overviews country experience with subsidy reform, drawing lessons.

Energy industries -- Caribbean Area. --- Energy industries -- Latin America. --- Fiscal policy -- Caribbean Area. --- Fiscal policy -- Latin America. --- Government business enterprises -- Caribbean Area. --- Government business enterprises -- Latin America. --- Natural resources -- Caribbean Area. --- Natural resources -- Latin America. --- Natural resources --- Energy industries --- Fiscal policy --- Government business enterprises --- National resources --- Resources, Natural --- Economic aspects --- Resource-based communities --- Resource curse --- Industries --- Power resources --- Nationalized companies --- Parastatals --- Public enterprises --- State-owned enterprises --- Business enterprises --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- E-books --- Investments: Energy --- Macroeconomics --- Public Finance --- Energy: Demand and Supply --- Prices --- Electric Utilities --- Trade Policy --- International Trade Organizations --- Energy industries & utilities --- Investment & securities --- Public finance & taxation --- Energy subsidies --- Fuel prices --- Electricity --- Tariffs --- Oil prices --- Expenditure --- Commodities --- Taxes --- Expenditures, Public --- Electric utilities --- Tariff --- Dominican Republic

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