The International Monetary Fund, (IMF) has advised oil exporting countries in Africa to, as a matter of urgency, create fiscal buffers, against possible future oil price falls.
According to the organization’s statement yesterday, African oil exporters have not made significant savings from the current high oil prices in the last two years.
Nigeria represents an embarrassing irony, as the Federation Account has not received any oil revenue for many months, on the excuse that the entire monthly oil revenue was being spent on the subsidy of imported petrol.
IMF said. “Oil exporters in sub-Saharan Africa should target buffers of around 5 to 10 percent of gross domestic product to manage large swings in oil prices.
“For many countries, this means they will need to maintain annual fiscal surpluses up to 1 percent per annum over a 10-year period.
“As noted in our latest Regional Economic Outlook, oil prices have fluctuated from lows of $23 per barrel to a peak of $120 over the last two years, resulting in highly uncertain revenues in oil-dependent economies.
“However, most oil exporters in the region haven’t accumulated enough savings to insure against unpredictable oil price changes.
“In fact, sovereign wealth funds in sub-Saharan Africa hold assets of just 1.8 percent of gross domestic product—compared to 72 percent in the Middle East and North Africa—forcing countries to borrow or draw down financial assets when oil prices fall.
Published on: Vanguard
Publication Date: 21/12/22