Baunsgaard et al, (2012) ‘Fiscal Frameworks for Resource Rich Developing Countries', IMF, Staff Discussion note SDN/12/04


This paper examines options for fiscal policy frameworks in resource rich developing  countries. In doing so, it reassesses the role of the permanent income hypothesis, especially
in low-income countries seeking to tackle in frastructure and development needs by scaling
up growth-enhancing expenditure.
The paper concludes that the fiscal policy framework:
•should reflect country-specific factors, which may change over time;
•should promote the sustainability of fiscal policy;
•should be sufficiently flexible to enable scaling up growth-enhancing expenditure,
especially in low-income countries;
•should consider absorption capacity constraints and the quality of public financial
management systems;
•should provide adequate precautionary buffers in countries that are vulnerable to high
volatility and uncertainty of resource revenue; and
•could be supported by resource funds if they are properly integrated with the budget and
the fiscal policy anchor.

Access the paper here.