Friday , June 14 2024

IMF Seeks Financial Buffers for African Oil Exporters

The International Monetary Fund (IMF) has recommended African oil exporting nations to build up their fiscal reserves in anticipation of potential future drops in oil prices.

African oil exporters have not realised appreciable savings from the recent high oil prices, according to the organisation’s statement yesterday.

IMF said: “Oil exporters in sub-Saharan Africa should aim for reserves of around 5 to 10% of GDP to handle significant changes in oil prices.

IMF Seeks Financial Buffers for African Oil Exporters(spadetv.africa)

In reality, sovereign wealth funds in sub-Saharan Africa only hold assets equivalent to 1.8 percent of GDP, compared to 72 percent in the Middle East and North Africa.

As a result, when oil prices decline, these nations are forced to borrow money or use up their financial reserves.

“As a result, in the ten years leading up to 2020, the region’s oil producers’ annual growth rates were more than 2 percentage points lower than those of non-resource-intensive nations. Additionally, debt payment expenses have been nearly twice as expensive as in other sub-Saharan African nations.

“Oil income in the area might decrease by up to 25% by 2030 and by 50% by 2050. The oil exporters in the area might negotiate the transition to sustainable energy while controlling oil price swings by constructing buffers today.

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