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GTAP Resource #4506

"Managing depleting gold revenues in Mali: An assessment of policy options"
by Traore, Fousseini and Calvin Djiofack

Mali is Africa’s third largest gold producer (just behind South Africa and Ghana) with 43 tons in 2010 and the ninth largest exporter in the world. In 2007, gold mining represented 7% of GDP and 8% in 2008. Given the outward orientation of the sector in Mali (repatriation of profits by foreign companies, high level of imports of petroleum and capital goods, low level of employment, weak backward linkages…), the main impact on the whole economy is through the fiscal channel. The revenue from the mining operations (royalties, dividends, profit and payroll taxes) represents USD 108.6 million on average per year and 17.6% of total government revenue.

Since 2006 the production has been declining and no new mine has been discovered and only 500 tons of reserves had been identified. With this decline in production, one of the main questions is to what extent these tax flows will be maintained and if not, what are the policy options available for the government?
The main objective of the paper is to assess some policy options available to the Malian government which is facing declining gold revenues. The theoretical background of the paper builds on the earlier debate about managing natural resources and windfall gains and goes beyond the traditional permanent income approach to take into account market failures, the low capital stock in developing countries as recently suggested by Van der Ploeg and Venables (2009), Collier al. (2010) as well by as well as the new fiscal framework suggested by the IMF (Baunsgaard et al., 2012). To our knowledge this is the first application for Mali.

To assess the impact of the depletion of gold revenues on the Malian economy we use the recursive dynamic general equilibrium - Linkage - model of the World Bank. It is a global model which can be reduced to fit a single country needs. The recursive dynamic approach consists of solving sequentially the model (one period at a time) with an update of the main macroeconomic variable...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Version: 1.0
Created: Traore, F. (4/15/2014)
Updated: Traore, F. (6/15/2014)
Visits: 1,569
- Dynamic modeling
- Economic development
- Economic growth
- Africa (West)

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