Project Aim

The fiscal breakeven oil price (FBOP) is the oil price that is necessary to balance the budget of an oil-exporting country. It is an indicator calculated by various organizations, in particular the IMF, based on the analysis of the countries’ revenue and expenditure and the relationship between revenue and oil price.

The comparison between the FBOP and the current international oil price serves to measure the mismatch between the government’s fiscal position and the oil price. A FBOP higher than the current oil price means that the planned government budget would lead to a deficit. In this case, the standard macroeconomic policy prescription is fiscal consolidation (by either cutting expenditure or increasing taxes or doing both), especially for those countries with the highest FBOP.

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