Effective Exchange Rate Index Research Articles

Real Effective Exchange Rate and Export Sophistication: A Dynamic Panel Data Analysis

In recent years, a new strand of the literature argued that not the quantity, but the quality of exports is at the core of economic growth and development. Therefore, strategies aiming to improve the quality of exports should be a major concern for policy makers. One of the most important policy tools that could affect exports and their quality is the real effective exchange rate. However, connections between the quality of exports and real effective exchange rate have not been fully explored. Based on a panel data of 57 countries for the years between 2005 and 2015, this paper investigates the relationship between export sophistication and real effective exchange rate. Using a novel database of export sophistication, taking into account two different real effective exchange rate indices and utilizing a dynamic panel data methodology, namely system GMM, this paper shows that an appreciation in real effective exchange rate improves the sophistication of exports. In addition, empirical results also show that the initial income of countries, foreign direct investment, human capital, and domestic savings positively affect export sophistication, whereas population growth decreases the sophistication of exports.

Futures Markets and Macroeconomics: Empirical Evidence from China

This paper uses the methods of Granger causality test, cointegration relationship test, error correction model and shock response function in cointegration correlation theory, and uses the monthly data from 2003.1 to 2023.5 to study the role and influence of futures market variables (price index, total turnover, total open interest) on sixteen macroeconomic variables. The results show that the three indicators of the futures market have a guiding effect on industrial added value, net export, fiscal revenue and fiscal expenditure at the same time. The price index and total turnover also have a guiding effect on the interbank 7-day interest rate and the RMB real effective exchange rate index. The total turnover and total open interest also have a strong guiding effect on the total import and export volume, the investment amount of fixed assets, and the total retail sales of social consumer goods. The price index also has a strong guiding effect on the producer price index, total loans, and the exchange rate of the US dollar against the RMB. The total open interest also has a strong guiding effect on the total loan. The cointegration test and error correction model show that in the short and long term, the futures market variables have a strong or weak quantitative impact on twelve macro variables, and the shock response function curve shows that the futures market variables have different impact effects on twelve macro variables. It shows that the futures market has a relatively strong impact on the macroeconomy, but there is still much room for improvement in the scope and depth of influence. It is suggested that the futures market should make efforts in terms of variety expansion, internationalization and supervision to further promote the comprehensive development of the domestic macroeconomy.

Effect of Ukraine’s public debt management on its macroeconomic development: VAR modeling

One of the tools of economic policy of any country is efficient public debt management, which influences and determines the dynamics of key macroeconomic indicators. The study aims to assess how public debt management affects Ukraine’s macroeconomic development. The analyzed period includes data of 2015–2021. Econometric modeling is used to establish the existence of causal relationships between the dynamics of public debt and changes in key macroeconomic indicators using the Granger causality test and VAR (Vector Autoregression) model. The obtained results demonstrate that during the study period, the strongest links existed between the public debt and GDP, debt servicing and Ukraine’s total state budget expenditures, public debt and consumer price index, real effective exchange rate index of the hryvnia to the US dollar, and political stability index. At the same time, the calculations proved that public debt does not have a significant impact on foreign direct investment and the level of imports of goods and services. The proposed model allows for forecasts for future periods and can be used in developing public debt management policy.

Türkiye in 2002-2023 Seçili Makroekonomik Değişkenlerin BİST Bankacılık Endeksine Etkisi: 2002-2023 Türkiye Örneği

The increasing number of financial instruments in the financial markets and the increase in product diversity in the real sector push the relevant markets to new searches in terms of both financing and competitiveness. In this context, in this study, the transformation of the recent global financial mobility and increasing financial competition in the macroeocomic variables in the Turkish economy and the possible effects of this transformation in selected macroeconomic variables on the banking sector, which is the most important pillar of the financial sector, were analyzed by determining the effects of the nominal effective exchange rate index (EERI), industrial production index (IPI) and consumer price index (CPI) on the banking stock exchange index between the periods 2002M01-2023M03 and the direction and degree of the relationship between the relevant variables were tried to be determined. In this context, since the Phillips-Perron unit root test results of the variables included in the analysis are stable at different stationary levels, the ARDL Boundary Test method was performed and the results obtained showed that; It was concluded that there is a positive and long-term relationship between the nominal EERI and the CPI and the banking stock exchange index, therefore the relevant variables are cointegrated, but the IPI and the banking stock exchange index are not long-term cointegrated.

Revisiting the Nexus between Turkish Tourism Index Returns and Economic Policy Uncertainty: Partial Wavelet Coherence Analysis

This study reevaluates the well-documented negative relationship between the Turkish tourism index stock returns and economic policy uncertainty (EPU) indices using a wide range of EPU indices that span from 1997 to 2003. The aim of the paper is to find out whether EPU indices a have particular importance for the tourism companies’ stock returns or they end up with the same consequences regardless of the sector. To this end, Partial Wavelet Coherence analysis is conducted using the BIST 100 and the real effective exchange rate indices as conditioning variables. Results show that the negative relationship between the EPU indices and Turkish tourism index returns tends to disappear when controlled for the BIST 100 index returns. EPUs are shown to have no particular effect on the excess stock return performance of Turkish tourism companies. The policy uncertainties in Europe (particularly in France and, to a lesser extent in Germany) become effective only after controlling also for the changes in real effective exchange rates.

The Relationship Between Net Errors and Omissions Item and Real Effective Exchange Rate Index: A Study on Turkey

Ödemeler dengesi tablosunda yer alan net hata ve noksan (NHN) kalemi, bilançoda denkleştirme unsuru olarak kullanılmaktadır. Türkiye’nin NHN kaleminin son yıllarda sergilediği yüksek hacimli iniş ve çıkışlar kamuoyunda tartışılmaktadır. Türkiye için hesaplanan NHN kalemi 1984-2022 döneminde ortalama 1,3 milyar dolar fazla vermiştir. 1984-2000 yılları arasında 8 defa fazla, 9 defa açık veren NHN kalemi, 2001-2022 döneminde 13 defa fazla, 9 defa açık vermiştir. Ayrıca 2018 yılında NHN fazlalığı 21,08 milyar dolar ile Türkiye için tüm zamanların rekor seviyesine ulaşmıştır. Bu çalışmada, NHN kalemi ile reel efektif döviz kur endeksi (REK) arasındaki ilişki incelenmektedir. Bu amaç doğrultusunda, 2003:01-2022:10 dönemine ait aylık veriler kullanılarak üç dönem (2003-2010, 2010-2022 ve 2003-2022) için ekonometrik analiz yapılmıştır. Ekonometrik analizde, içsel kırılmaları dikkate alan Hatemi-J eş bütünleşme testi ve NHN kalemi ile REK endeksinin pozitif ve negatif şoklarını dikkate alan Hatemi-J Asimetrik Nedensellik Testi kullanılmıştır. Yapılan analiz sonucunda, NHN kalemi ile REK endeksinin uzun dönemde birlikte hareket etmedikleri tespit edilmiştir. Nedensellik test sonuçlarının ise dönemler arasında farklılaştığı ve ulaşılan bazı sonuçların ekonometrik olarak anlamlı olsa da iktisadi açıdan yorumlanmasının doğru olmayacağına karar verilmiştir. Örneğin; 2010-2022 döneminde REK değişkenindeki pozitif şoklardan kümülatif olarak hesaplanan NHN değişkenindeki hem pozitif hem de negatif şoklara doğru bir nedensellik olması iktisadi bir anlam taşımamaktadır. Söz konusu bu durum, REK değişkeni ile NHN değişkeni arasında tutarlı bir ilişkinin olmadığı şeklinde yorumlanmıştır.

THE IMPLICATIONS OF BREXIT REFERENDUM ON THE LONG-RUN RELATIONSHIP BETWEEN THE EURO AND POUND STERLING: RESIDUAL AUGMENTED LEAST SQUARE BASED EVIDENCE

Purpose- The aim of this study is to investigate the economic effects of Brexit from the viewpoint of exchange rates. This research studies the impact of Brexit on long-run relationship between euro and pound sterling. It is crucial to assess how Britain’s vote to leave the European Union affects long-term relationship between euro and pound sterling because such action may have significant financial and economic implications on both economies (Diez et al., 2019; Korus & Celebi, 2019; Nagarakatte & Natchimuthu, 2022). Methodology- This study utilizes daily trade-weighted real effective exchange rate indices for euro (EUR) and pound sterling (GBP) over the period of January 1, 2013 to December 31, 2019 to investigate the impact of Brexit referendum took place on June 23, 2016 on the long-run relationship between euro and pound sterling. We exclude European sovereign debt crisis and pandemic periods. As stated previously, this study considers June 23, 2016 as the reference to assess the impact of Brexit on the relationship between currencies. Therefore, our analysis involves three periods including full sample period, pre- and post-Brexit. Empirical investigation relies on residual augmented least squares (RALS) based approach. Due to Im & Schmidt (2008), Im, Lee, & Tieslau (2014), and Lee, Lee, & Im (2015), we use RALS-based unit root test and cointegration analysis. While traditional tests (augmented Dickey-Fuller unit root and Engle-Granger cointegration) assume that error terms are normally distributed, which is a very strict assumption, RALS-based tests relax that condition. We also conduct Granger (non-) causality test proposed by Toda & Yamamoto (1995) to investigate the direction(s) of possible causalities between euro and pound sterling for each period. Findings- RALS based unit root test results suggest that the time series of exchange rates contain unit root for full sample, pre- and post-Brexit periods. The only exception is the time series of sterling pound is I (0) in post-Brexit period. According to the unit root test results, we can conclude that foreign exchange markets in both economies follow weak form efficiency for all sample periods. However, this is not valid for the sub sample where the time series of pound sterling is stationary at level, in post-Brexit. RALS based cointegration test results show that there is no cointegration between the time series of EUR and GBP. This general result is confirmed by both models, RALS ADL and RALS EG2. However, we observe a cointegrating relationship between two currencies in post-Brexit period when we treat GBP as the dependent variable. According to the Granger non-causality test results, we fail to reject null hypothesis and conclude that there is no causality running from EA to UK and vice versa for all sample periods. Test results reveal one exception. In the post-Brexit period, EUR Granger causes GBP implying that the past values of EUR are useful to forecast GBP. Conclusion- Interdependence of world economies is increasing as the financial integration is deepening. Key political, economic, and financial developments in the global world should be followed and assessed. Such developments at home or abroad may influence the prospects. Therefore, it is crucial to assess the outcomes of Brexit-like events that clearly have impact on economic and financial environment to take necessary actions. Keywords: Exchange rates, Brexit referendum, Euro, Pound Sterling, RALS Cointegration Test JEL Codes: C32, F31, G15

Macroeconomic Determinants of Housing Prices in Hong Kong

This article aimed to study the causal relationship between the housing prices and the macroeconomy in Hong Kong from 1998M1 to 2019M12. We explored both the long-term and short-term causalities between the housing prices, proxied by the Centa-City Index (CCI), and six selected macroeconomic variables. The results indicated the presence of causality between the housing prices and two macroeconomic variables: money supply and exchange rate index. These two variables had an impact on housing prices, regardless of short-term dynamics or long-term equilibrium. While the relationship between money supply and housing prices was found to be bidirectional, the effective exchange rate index Granger caused housing prices only. Additionally, a long-term negative correlation was observed between the housing prices and the interest rates. Our findings may help investors understand the determinants of housing prices in Hong Kong and provide policymakers with some valuable insights on how to introduce fiscal policies to stabilize housing prices.

INTERACTION OF MACROECONOMIC VARIABLE SHOCKS AND MONETARY POLICY INTERVENTIONS ON THE PROFITABILITY OF SHARIA COMMERCIAL BANKS IN INDONESIA

Background. Economic growth and financial development in Indonesia are supported by developments in the Islamic banking industry. The business continuity of Islamic banking is determined by financial performance, which is measured by the level of profitability. The profitability of Islamic commercial banks is thought to be influenced by macroeconomic variables and monetary policy interventions.Purpose. This study aims to analyze the effect of shocks on macroeconomic variables, including the real effective exchange rate and consumer price index, and monetary policy intervention through the policy instrument of the Indonesian central bank's benchmark interest rate, namely the BI Rate, and the effect of the capital adequacy ratio on the profitability of Islamic commercial banks in Indonesia in the short and long term.Method. This study employs error-correction model analysis to completely utilize secondary data from January 2015 to May 2022. Data gathered from the Financial Services Authority's (OJK) Sharia Banking Statistics and Fred Economic Data (FED)Results. The research results show that the real effective exchange rate and consumer price index affect the profitability of Indonesian commercial banks in the long term but do not have a significant effect on the profitability of Islamic commercial banks in the short term. Monetary policy does not have a significant effect in the short or long term. Meanwhile, the capital adequacy ratio has a significant influence on the profitability of Islamic commercial banks in the short and long term.Conclusion. Macroeconomic variable shocks have the ability to disrupt banking performance in the short term, and this situation shows that banking management has not put flexible policies and a strategic approach to short-term changes in place. Short-term changes are still managed from the standpoint of handling internal conditions, however management is fairly effective at controlling capital adequacy.

Forecasting Financial and Macroeconomic Variables Using an Adaptive Parameter VAR-KF Model

The primary objective of this article is to present an adaptive parameter VAR-KF technique (APVAR-KF) to forecast stock market performance and macroeconomic factors. The method exploits a vector autoregressive model as a system identification technique, and the Kalman filter is served as a recursive state parameter estimation tool. A further development was designed by incorporating the GARCH model to quantify an automatic observation covariance matrix in the Kalman filter step. To verify the efficiency of our proposed method, we conducted an experimental simulation applied to the main stock exchange index, real effective exchange rate and consumer price index of Thailand and Indonesia from January 1997 to May 2021. The APVAR-KF method is generally shown to have a superior performance relative to the conventional VAR(1) model and the VAR-KF model with constant parameters.

THE EFFECTS OF CHANGES IN EXCHANGE RATE ON FOREIGN HOUSİNG DEMAND: IN TURKEY

Çalışmamızın amacı reel döviz kurundaki değişimlerin yabancı konut talebi üzerindeki etkisinin araştırılmasıdır. Bu amaçla yabancılara yapılan konut satışlarına döviz kurunun etkisi incelenmek istenmiştir. Bu çalışmada ülke uyruklarına göre yabancılara yapılan konut satış rakamları 2015 yılı itibariyle yayınlandığı için 2015-2021 dönemini kapsayan ülke uyruklarına ait aylık yabancılara yapılan konut satış verileri kullanılmıştır. Bu doğrultuda yapısal kırılmalı birim kök ve eşbütünleşme testleri kullanılmıştır. Zaman serisi analizinin kullanıldığı modelde bağımlı değişken yabancılara konut satışı olup bağımsız değişkenler olarak reel efektif döviz kuru ve konut fiyat endeksi rakamları kullanılmıştır. Gregory-Hansen eşbütünleşme testi sonuçlarına göre yabancılara konut satışı ile reel efektif döviz kuru ve konut fiyat endeksi arasında uzun dönemli eşbütünleşme ilişkisinin varlığı görülmektedir. Eşbütünleşme ilişkisi bulunan değişkenler arasında uzun dönemli ilişkinin analizi yapısal kırılmaların kukla değişken olarak analize dahil edildiği FMOLS katsayı yöntemi ile araştırılmış ve reel efektif döviz kurundaki %1’lik azalış (TL’nin değer kaybetmesi) yabancı konut satışını %3.43 arttırdığı sonucu elde edilmiştir. Konut fiyat endeksi değişkeninin katsayısı ise istatistiksel olarak anlamsız çıkmıştır.

The Relationship Between the Health Services Price Index and The Real Effective Exchange Rate Index in Turkey: A Frequency Domain Causality Analysis

This paper examines whether the causal relationship between the health care price index and the real exchange rate index is temporary or permanent. To do this, we first apply the Toda- Yamamoto causality test with a structural break and then continue with frequency domain causality tests based on the Toda-Yamamoto causality test with a structural break. The results of the Toda- Yamamoto causality test with a structural break indicates that there is causality running from the real exchange rate index to the health care price index. Moreover, the frequency domain causality test results based on the Toda-Yamamoto causality test with a structural break provide evidence that the real effective exchange rate causes temporarily (in the short-and medium term) to the health care price index. The effect of the real exchange rate index on the health care price index lasts between 2 months and 8.37 months. These findings imply that there is a significant exchange rate pass-through in health care inflation in the short-and medium term. Thus, the health authorities should take into account these findings when planning health care policies in Turkey, especially health care services heavily dependent on imported materials.

Measuring the Success of EU Expansion Process Comparing FDI Levels before and after the Accession to EU In Relation to CPI-Based Real Effective Exchange Rate Indices

The economic impact of the EU expansion on individual member states belong to imperative justifications of the EU enlargement. These contributions reward the union membership becoming the partial sovereignty loss trade-off. FDI inflow is considered one of such key benefits for new members. While the FDI impacts on economies have been studied from many angles, factors that cause the attraction of FDI are to be analysed as they are an important influence in future investment decisions making part of the enlargement justification, justifying the sovereignty loss trade-off. Future FDI inflows may be signalled by variables such as Real Effective Exchange Rate, being a proxy for trade competitiveness, expected to differ in economies prior to and after the entry to EU. The analysis of the relationship between the Real Effective Exchange Rate and the FDI inflow is performed on selected Eastern European countries before and after the accession, with the conclusion that convincing arguments for the FDI inflow indications, at least when measuring them through the lens of Real Effective Exchange Rate and GDP, may not be present.

The American–China Trade War and Spillover Effects on Value-Added Exports from Indonesia

This paper examines the impact of special tariffs between China and the United States (US) on their indirect trade partners via spillover effects. We applied a Value-Added Real Effective Exchange Rate (VA-REER) index to simulate how an increase in tariffs induces changes in demand for goods from Indonesia and selected Asian partners. We used the Input–Output Database (WIOD) to simulate the spillover effects across partners via the Global Value Chain (GVC) using data from 2000 to 2014. The results suggest that demand is doubly more responsive to prices (tariffs) when value-added (VA-REER) index is used instead of the conventional REER index (gross trade). We found that US tariffs on Chinese goods have a negative spillover impact on Indonesia’s exports. Meanwhile, the Chinese tariffs on American goods lead to small increased demand for Indonesian exports. We also found that US and China become equally crucial for Indonesia under the Value-Added REER scheme, concluding that the conventional REER approach may have underestimated the impact of US tariffs on Chinese goods. Finally, we found that Indonesia would be at risk to trade shocks if the US applies tariffs on China, Asian partners (Japan and South Korea), and the European Union (EU).

Exchange rate pass-through to Japanese prices: Import prices, producer prices, and the core CPI

Against the background of the two percent inflation target that Japan set in 2013, we investigate the impediments in the process of passing on exchange rate fluctuations to the core consumer price index. To this end, we construct the industry-level nominal effective exchange rate and industry-level producer price indices, which are matched with the industry classifications used for import price indices. Time-varying parameter vector autoregression analysis reveals that, in general, exchange rate pass-throughs increased, especially after the global financial crisis. Among the pass-throughs that occur at each stage of the import price, domestic producer price, and consumer price, we find that the weakest link exists between the import price and domestic producer price. However, the impact on the within-industry effect is not negligible; the small spillover effect on other industries at the producer price stage prevents consumer prices from rising after depreciation.

Effects of Futures Varieties Opening Up on Currency Internationalization: Evidence from China

The internationalization of the futures market has a certain impact on the internationalization of the RMB, and the opening up of futures varieties to the outside world is the most important link in the internationalization of the futures market, and it is necessary to quantitatively study the quantitative impact of the opening up of futures varieties on the internationalization of the RMB. Based on the monthly data from 2018 to 2022, this paper adopts the quantitative research method of cointegration-related theoretical model for the domestic international commodity futures (crude oil, iron ore, PTA) variables (futures price, turnover, position volume) on the variables of RMB internationalization (RMB international payment global market share, cross-border trade RMB business settlement amount, foreign exchange reserves, RMB real effective exchange rate index, RMB financial transactions), and studies the overall impact of international commodity futures on RMB internationalization. The study shows that the three indicators of the international commodity futures variable have different degrees of influence on the RMB internationalization index, of which the influence of price and open interest is significantly greater than the turnover. In the long run, the international futures price and open interest have a positive impact on the internationalization of the RMB, the turnover has a negative impact, and the impact of crude oil futures prices and open interest is stronger than that of iron ore and PTA. In the short term, the international commodity futures indicators have a certain impact on the internationalization of the RMB, crude oil and iron ore have a greater impact than the PTA, there are differences in the international development of different commodity markets, and the fitting effect of the model crude oil is better than other varieties. It is recommended to promote balanced development of the futures market internationalization through a variety of measures, continuously improve the international pricing power and influence of futures varieties, increase the open interest of futures, moderately reduce the turnover, and effectively promote the further development of RMB internationalization.

Does the Number of Hajj Pilgrims Boost Economic Growth in Saudi Arabia?

This paper uses the multivariate Johansen cointegration approach and Granger causality tests to study the causal relationship between the number of pilgrims and the non-oil GDP growth in Saudi Arabia over the period 1980–2016 by integrating the real effective exchange rate index as an additional variable. Our findings indicate that there is only one long-run relationship between the three variables when the non-oil GDP growth is the dependent variable. There is a unidirectional long-run causality from the number of pilgrims to non-oil GDP growth. Besides, we find no short-run causal relationships between the three variables. Therefore, an important policy implication resulting from this study is that pilgrims can be a led growth factor to economic growth in Saudi Arabia in the long run. The pilgrimage event can, therefore, be an excellent opportunity for Saudi Arabia to boost its economic activity as stated by its 2030 vision.

A Dynamic Analysis of Oil Prices and Inflation Model and Method

The study examines the impact of oil prices on inflation by applying a threshold model for five (5) ASEAN members, namely Malaysia, Indonesia, Singapore, Thailand and the Philippines. Three (3) indicators for oil price shocks are extracted in conjunction with Mork [23], Lee et al. [22] and Hamilton [13] methods. Consequently, these values are used to delineate the effect of price shock differentials. The pass-through effect is integrated into the threshold equation model. Later, the model is calculated to have an impact on inflation of high and low oil prices. The result is that the oil price shock appears to have a major impact on inflation when prices are in the high regime. This extends to all shock measures. The effective exchange rate and industrial price index (IHP) are classified as the primary determinant of inflation in all sample countries. As such, counter-cyclical monetary policy considerations should remain driven by the emerging downside risks of oil price shocks. It requires a more accommodative monetary environment to offset inflationary pressures on the domestic economy.

Financial centers of new industrial countries in the world financial architecture

The views of scholars concerning the definition of «international financial center», which makes it possible to formulate the definition of international financial center essence are summarized in this paper. The factors influencing the formation of international financial center incluing: stable financial system, stable currency, exchange rate stability, political and social stability in the country, favorable geographical location, developed financial infrastructure, open economy for free movement of capital, etc. are identified. The role of international financial centers in increasing their global competitiveness, achieving higher levels of economic growth, prosperity and social progress is substantiated. The classification of international financial centers is investigated. The place of the Hong Kong Financial Center in the financial architecture of the world is determined. The main parameters of the current state of the Hong Kong Financial Center: the USD / HKD exchange rate, the effective exchange rate index weighted by trade, the Hang Seng index, market capitalization, etc. are diagnosed. SWOT-analysis of the Hong Kong Financia Cente is carried out in order to identify its strengths, weaknesses, opportunities and threats. Based on the results of the problem of its functioning, a set of measures to improve competitiveness is also proposed. Hong Kong has favorable macroeconomic and institutional environment, qualified personnel, and is the fifth most competitive international financial center in the world. However, there is a low degree of international element in the domestic stock market, there is also risk of losing the status of «international financial center», other regional economies that have greater access to international investment opportunities in the stock market, such as Singapore, may be a threat. The financial center should focus on overcoming the effects of the coronavirus, promote the share of foreign investment in the economy, take a set of measures to overcome the country's recession, review legal, regulatory and tax requirements to promote development, improve quality of life and attractiveness, and become Asia's leading currency hub.

Transition to renewable energy technologies and future prospects for oil‐exporting countries

AbstractIn the context of recent energy transition from hydrocarbon molecules to electrons, this research aims to examine the degree of substitution between renewable energy sources and fossil fuels through a dynamic framework of time‐varying parameters under state‐space model. For this purpose, this research selects four major oil‐importing countries and employs annual time series data for crude oil imports, gross domestic product, crude oil price, renewable energy consumption, population growth, real effective exchange rate and industrial production index for each country in the sample while covering the period 1991–2018. The estimates reveal positive and significant income, population and industrial production index elasticities for most of the countries in the sample. In addition, this research finds negative and statistically significant elasticity between renewable energy consumption and demand for imported crude oil for India, China and Japan, although magnitude is very small. However, there is insignificant and little substitution for US data. This research is unique as to our knowledge there is no such study available before and it provides insights for policymakers in oil‐exporting countries to develop sustainable long‐term diversification strategies to reduce reliance on oil revenues.