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International Monetary Fund

’s spending expanded to levels that were difficult to scale back once oil revenue started to decline, resulting in mounting public debt. In order to avoid such setbacks, it is important to develop a medium-term fiscal strategy that keeps debt sustainable while allowing for scaled-up spending to meet pressing social needs. 3. This paper presents a possible fiscal strategy for Cameroon based on the permanent income approach . According to this approach, Cameroon could permanently sustain primary public spending of 15.4 percent of nonoil GDP a year from 2007 on as long as

International Monetary Fund. Middle East and Central Asia Dept.
This 2020 Article IV Consultation with Kuwait highlights that non-oil growth strengthened to estimated 3 percent in 2019, propelled by government and consumer spending. The challenge to reduce dependence on oil and boost savings has become more urgent. The subdued forecast for oil revenues is weighing on near-term growth and fiscal and external balances. Embedding fiscal measures in a comprehensive reform package that promotes private sector growth, strengthens governance and accountability, and improves public services would help build broad support for reforms. A rules-based fiscal framework would improve management of oil revenues. A rule-based framework would help anchor fiscal policy on a long-term objective of intergenerational equity. It should include a well-calibrated operational rule that helps reconcile long-term savings and near-term economic stabilization objectives. Financial sector reforms should focus on bolstering resilience and deepening inclusion. Sustaining reforms to foster private sector-led and diversified growth will be critical. With limited scope for public employment going forward, a vibrant private sector must emerge to absorb the large number of Kuwaitis entering the labor market in coming years.
International Monetary Fund

far does not allow for growth in consumption out of oil wealth. Under the version of permanent income framework discussed so far, oil wealth can decline relative to nonoil GDP. Indeed, under the PIH studied so far any positive consumption growth path (with a positive trend above the Friedman’s zero growth rule) will either deplete oil wealth too rapidly, lead to costly borrowing to finance the extra consumption, lead to unproductive investment or a combination thereof. None of these paths are sustainable. 23. In contrast, standard models of optimal growth, such as