IMF Gathers Ideas on Best Use of Natural Resources
The boom in global commodity prices and new discoveries of resources such as oil, gas, and minerals offer vast opportunities for economic development in many low- and lower–middle income countries.
The IMF is seeking views on the best ways to tax natural resources, and how to use the money earned to boost standards of living in the countries that own them.
Avoiding the pitfalls
Developing countries face important economic policy challenges in trying to realize the full development potential of their natural resources and to avoid the pitfalls that have previously plagued some countries that are rich in resources but often do not see the full benefit of them.
The IMF, which provides policy suggestions and technical expertise on economic issues, aims to promote a discussion on the use of natural resources in development and to reassess its policy advice for resource-rich low-income and lower–middle income countries. The objective is to take a fresh look at the IMF's policy advice in light of past experience, the growing importance of natural resources in many economies, and new insights from recent research. Comments can be channeled through a special webpage. The deadline is April 27.
Countries that have natural resources face macroeconomic challenges from exhaustible and volatile revenues, complicating the desire to scale up spending to close the infrastructure gap that these countries face.
How fast can these countries scale up spending without compromising macroeconomic stability? What are features of appropriately designed fiscal policy frameworks for those types of economies, and how can the sustainability of external positions (such as the current account and exchange rate) be assessed?
An opportunity not a waste
To ensure that natural resources provide an opportunity to promote economic and social development, build skills, and close infrastructure gaps, several economic policy challenges must be addressed. These policy challenges extend to areas such as resource taxation, fiscal policy design, sustainability of external balances, the impact of resource booms on exchange rates, and complex linkages between resource and nonresource sectors.
For instance, governments must try to balance a country's interests with those of companies charged with...
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