02109cas a2200265 a 4500 AALejournalIMF004821 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451866445 1018-5941 BD-DhAAL BD-DhAAL Carcillo, Stephane. Catch-Up Growth, Habits, Oil Depletion, and Fiscal Policy : Lessons from the Republic of Congo / Stephane Carcillo, Mauricio Villafuerte, Daniel Leigh. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (28 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In a number of oil producing countries, oil revenue accounts for the majority of government revenue, but is expected to be depleted in a relatively short time frame. Ensuring that fiscal policy is on a sustainable path is thus a high priority, but political and social adjustment costs create incentives to delay fiscal consolidation. This paper estimates how the permanently sustainable non-oil primary deficit (PSNOPD) depends on the speed of consolidation, using an optimization model with habit formation. Realism is added by allowing for negative growth-adjusted interest rates during a temporary period of catch-up growth. Applied to the Republic of Congo, this approach leads to the following conclusions: (i) the current fiscalpolicy stance is unsustainable; (ii) social adjustment costs justify spreading the bulk of the adjustment over five years; and (iii) the slower the adjustment, the lower the PSNOPD level. Mode of access: Internet Leigh, Daniel. Villafuerte, Mauricio. IMF Working Papers; Working Paper ; No. 2007/080 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/080/001.2007.issue-080-en.xml IMF e-Library