The International Monetary Fund said on Tuesday it stands ready to help
sub-Saharan Africa’s oil exporters cope with plunging crude prices and
growing fiscal pressures but has not received any new funding requests
from the region.
Nigeria and Angola instead have turned to the World Bank for assistance,
even though the IMF is typically viewed as the world’s go-to crisis
lender.
Facing an estimated $15 billion budget deficit in 2016, Nigeria’s finance
ministry has said it is looking to borrow as much as $5 billion. It has
held discussions with the World Bank, African Development Bank and China’s
Export-Import Bank due to their “concessionary rates of interest.”
The World Bank is discussing potential financing for Nigeria and Angola
through a program to support structural changes in an emerging market
country’s economy and government institutions.
The two sub-saharan African countries are the latest in what may become a
long line of oil-exporting countries to seek financial assistance to help
stem growing deficits as falling crude prices crush revenues. The IMF and
World Bank are already talking to Azerbaijan about a $4 billion financing
package.
On Tuesday, U.S. crude fell back below $30 a barrel, half its price in
June 2015 and down from about $100 two years ago.
“The sharp decline in oil prices represents a formidable shock on the oil
exporting countries of sub-Saharan Africa, especially in view of their
strong reliance on oil receipts for fiscal and external revenues,” an IMF
spokeswoman said in a statement.
The IMF noted that despite rising deficits, several of these countries
still have adequate foreign exchange reserves and low levels of overall
debt. This would suggest that a balance-of-payments crisis is not
imminent.
When IMF managing director Christine Lagarde visited Nigeria in January to
meet new President Muhammadu Buhari, she insisted that she was not there
to negotiate a loan program.
“With the exception of Chad, which already had a program in place with the
IMF prior to the oil price shock, we have not received any new request for
financial assistance from sub-Saharan African oil exporters,” the IMF
spokeswoman added. “We indeed stand ready to assist the authorities,
should such a request materialize.”
Although wealthier Gulf oil producers are expected to fare better due to
deeper reserves, the IMF issued a warning last week to Bahrain that it,
too should cut deficits now reaching 15 percent of economic output, which
have weakened investor sentiment.
REUTERS/MailOnline