Public Finance in the Arab Countries

The structure of public finance in the Arab countries has certain peculiar characteristics that deeply affect the conduct of economic policy and prospects for development. Oil revenue is by far the most important source of government finance in many countries. Non-oil producing countries also benefit from it in various forms: direct subsidies, transit tolls for passage through the Suez Canal or pipeline transportation, migrants' remittances. The latter do not accrue directly to the state treasury, but are indirectly taxed mainly through customs duties, as they cause an increase in the demand for imports.

Report prepared by the Istituto Affari Internazionali (IAI) and funded by the International Development Research Centre (IDRC). This study complements the IAI interdisciplinary research program on the foundations and nature of Arab states, “Nation, State and Integration in the Arab World”. Chapters 1-2, 6 and 8-9 published also in Hazem Beblawi and Giacomo Luciani (eds.), The Rentier State, London/New York, Croom Helm, November 1987. Chapter 3 published also in Giacomo Luciani and Ghassan Salamè (eds.), The Politics of Arab Integration, London/New York, Croom Helm, February 1988.