alyassin
2016-03-08, 00:37
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Public expenditure has played an important role in economic development, and more recently after the extraordinary oil windfall of the early 2000s; the ratio of government spending to GDP increased from 25% in 1970 to 45% in 2012. The average shares in total government expenditure over the period 1970 to 2012 amount to 63% and 37% for recurrent and capital expenditure respectively. There are three main reasons for a high rate of public spending: the social determinant by the rise of pressure demand on public services with an expansion of subsidies, public sector wage increases, and other efforts to respond to popular unrest; second, the financial determinant resulting from the hydrocarbon sector, where the government spending has moved strongly with hydrocarbon production (correlation coefficient 0.75) as a result of requirements development (infrastructures, housing, urban, education, health); third, the political determinant: an expansionary fiscal policy will continue to be employed, because it is a populist policy, adopted by many political parties. The fiscal expansion drove up the budget deficit to 20% of GDP in 2012 from 1% in 1999.
Public expenditure has played an important role in economic development, and more recently after the extraordinary oil windfall of the early 2000s; the ratio of government spending to GDP increased from 25% in 1970 to 45% in 2012. The average shares in total government expenditure over the period 1970 to 2012 amount to 63% and 37% for recurrent and capital expenditure respectively. There are three main reasons for a high rate of public spending: the social determinant by the rise of pressure demand on public services with an expansion of subsidies, public sector wage increases, and other efforts to respond to popular unrest; second, the financial determinant resulting from the hydrocarbon sector, where the government spending has moved strongly with hydrocarbon production (correlation coefficient 0.75) as a result of requirements development (infrastructures, housing, urban, education, health); third, the political determinant: an expansionary fiscal policy will continue to be employed, because it is a populist policy, adopted by many political parties. The fiscal expansion drove up the budget deficit to 20% of GDP in 2012 from 1% in 1999.