Dances with Wolves: Weather and Health Disasters and Fiscal Sustainability in MENA

Eman Moustafa () and Amira El-Shal ()
Additional contact information
Eman Moustafa: General Authority for Investment and Free Zones
Amira El-Shal: Cairo University

No 1520, Working Papers from Economic Research Forum

Abstract: Fiscal sustainability is a major source of concern in light of successive weather and health disasters. We estimate the contemporaneous and long-run effects of weather vis-à-vis health disasters on the fiscal sustainability of 21 Middle East and North Africa (MENA) economies during 1990-2020 using two-way fixed-effects and two-step system generalized method of moments strategies. We also examine if domestic resource mobilization and external financing act as fiscal stabilizers that mitigate disaster effects. We find that weather disasters reduce the budget and overall fiscal balances by 2.1 percent and 2.2 percent instantaneously and by 5.4 percent and 6.2 percent after one year, respectively. Health disasters reduce the budget and overall fiscal balances respectively by 0.4 percent and 0.3 percent instantaneously, with no long-run effects observed. Our estimates indicate that government debt can help mitigate all types of disasters. Domestic resources from sovereign wealth funds and business taxation are more effective in mitigating the effects of weather disasters compared to external sources of finance. Countries with higher foreign reserves and net savings are better able to fiscally endure health disasters. This study emphasizes the significance of domestic resource mobilization visà-vis external sources of finance in times of disasters

Pages: 28
Date: 2021-12-20, Revised 2021-12-20
New Economics Papers: this item is included in nep-ara and nep-env
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published by The Economic Research Forum (ERF)

Downloads: (external link)
https://erf.org.eg/publications/dances-with-wolves ... tainability-in-mena/ (application/pdf)
https://bit.ly/3qr09yO (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:erg:wpaper:1520

Access Statistics for this paper

More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Namees Nabeel ().