Hard- to- collect Revenues, Natural Resources and Sovereign Wealth Funds(Case Study of MENA Region)

The government financing has a significant place in the economic literature due to its distribution and allocation impact. In this study the government revenue resources are classified into two categories: “hard to earn” and “easy to earn” revenues. The main question is whether the increase in the share of export revenues earned by selling natural resources which is considered as a component of “easy to earn” revenues prevent the increase in the share of “hard to earn” revenues in the MENA region? And if so, whether existence of SWFs (sovereign wealth funds) in these countries has the ability to prevent an adverse effect of the natural resource revenues on “hard to earn” tax revenues? To answer these questions, panel data of 21 countries in the MENA region from 1990 to 2012 are used. The results show that increasing the share of natural resource revenues in GDP reduce the share of “hard to earn” revenues of governments in the MENA region. In fact, increasing the share of natural resource revenues will replace tax revenue share. Moreover, the SWFs have passive role in some countries and they have not been able to affect government financing.