The International Monetary Fund (IMF) on Friday
stated that the current drop in oil prices offers a
unique opportunity for Nigeria and seven other oil-
producing countries in Africa to implement politically
difficult oil subsidy reforms.
IMF’s Director for African Development, Antoinette
Sayeh who made the submissions at a press
conference in Washington DC, United States of
America at the ongoing IMF/World Bank Spring
Meetings, added that in the short run, dealing with oil
shock should be the priority.
Removal of oil subsidy in Nigeria and other African
countries has been a very sensitive and controversial
The IMF said although the eight African oil exporting
countries would be hard hit with generally limited
fiscal and external pressure, they are expected to
undertake significant fiscal adjustment, which will
ultimately dent their growth outlook.
“Faced with a massive shock and with limited buffers,
oil exporters will have no choice but to undertake
fiscal adjustment. Spending cuts should be directed,
to the extent, to non-priority recurrent spending, but
significant cuts in public spending cuts in public
investment are unavoidable.
“Where feasible, exchange rate flexibility will also be
important, to preserve scarce external reserves. The
drop in oil prices also provides a unique opportunity to
advance politically difficult energy subsidy reforms
across the region,” Sayeh said.
But she noted that Sub-Saharan Africa’s economic
outlook remained favourable, pointing out that the
region is set to register another year of solid
However, she regretted that security-related risks,
including those posed by Boko Haram and Al Shabab
had recently posed risks to the positive outlook.
“Indeed, the region’s economy is expected to expand
at four and half per cent in 2015, and will continue
being one of the fastest growing region’s in the world-
in fact, second only to emerging and developing Asia.
“That said, the economic expansion this year will be at
the lower end range experienced in the recent years.
This mainly reflects the impact of the sharp decline of
the oil and commodity prices that we have witnessed
over the last six months. However, as always for a
region with so much diversity, the effect of this shock
will be highly heterogeneous across the region,” she
Although she observed that Nigeria and the other
seven other oil producers on the continent would be
hard hit, she said much of the rest of the region’s
near-term prospects remained quite positive. Read more on Report Naija