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***This was not a CGD event and took place at the World Bank offices in Washington, DC***
MENA Chief Economist Seminar Series: "Sovereign Wealth Funds, Domestic Investment and Fiscal Rules" by Alan Gelb
Speaker Alan Gelb, Senior Fellow, Center for Global Development
Discussants Michel Noel, Practice Manager, GFMDR and Tito Cordella, Adviser, DECOS
Chair Shanta Devarajan, Chief Economist, Middle East and North Africa
The recent decline in world oil prices highlights the difficulties faced by oil exporting countries in the long-term management of their uncertain rents. The presentation considered different approaches to this question, including the implications of uncertain reserves as well as the tension between traditional “permanent income” fiscal rules and increasing calls for Sovereign Wealth Funds to invest in domestic infrastructure. No approaches are risk-free but efforts can be made to mitigate some risks through appropriate spending, investment and institutional rules. At the same time it is helpful to have some flexibility in rules so they can bend under stress rather than break.