- Dependence on natural resource endowments can be a mixed blessing. We are all familiar with the “resource curse” and the historic experience in many resource rich countries of boom-bust cycles, debt crises, and poor governance that have led to the persistence of poverty and lack of inclusiveness.
- In this regard, I am pleased to note that this conference focuses on the key challenges faced by all countries in ensuring that resource wealth contributes in a sustained and inclusive fashion to growth and higher living standards for all. With this in mind, we have deliberately highlighted two key areas; macro-fiscal issues and ways to promote economic diversification
- We focus on the important role of fiscal policy in the economic management in natural resource rich countries, where the government typically plays a dominant role in the economy through its control of natural resources and associated income. Decisions regarding taxation, expenditures—importantly including public investment, the appropriate fiscal deficit, savings mechanisms such as the role of sovereign wealth funds and the governance framework will have enormous consequences—not just for today, but also for future generations—with the potential to ensure successful development or alternatively to destabilize the economy.
- Diversification is an absolutely key area especially given the simple facts that the natural resource sectors in themselves typically employ very few people, and that the resource is exhaustible. Clearly also, it is every challenging. For inclusive growth in addition to wise use of the resources it is imperative that backward and forward linkages are developed between the natural resource sector and the wider economy. Achieving this objective involves financial sector deepening, building infrastructure, enhancing human capital, and promoting the agricultural sector.
Source: IMF
Anoop Singh
Director of the Asia and Pacific Department, International Monetary Fund
