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March 31, 2016 | English and Arabic | Jad Chaaban
Avoiding the Resource Curse in Lebanon

The discovery and extraction of oil and gas off the shores of Lebanon could ultimately translate into a boom in revenues for the government, which in light of current poor fiscal planning could lead to an uncontrolled expansionary budget policy and eventually a ‘resource curse’. If these revenues are spent with no oversight and proper planning, the country may well collect and allocate large streams of cash that make limited contributions to economic development. But the ‘resource curse’ could be avoided if appropriate policy adjustments are implemented in conjunction with the development of offshore hydrocarbon resources. The successful experiences of a few resource-rich countries like Norway have been largely attributed to properly managing resource wealth and its associated risks. The optimal response that takes advantage of the boom while mitigating its potential negative implications includes a set of fiscal, monetary, exchange rate, and structural reform policies.