THE IMF says it is 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 $15bn budget deficit in 2016, Nigeria’s finance ministry has said it is looking to borrow as much as $5bn. 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 programme 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 $4bn financing package.
US crude fell back below $30 a barrel on early February, 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.
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 President Muhammadu Buhari, she insisted that she was not there to negotiate a loan programme.
‘With the exception of Chad, which already had a programme 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 materialise.’
Although wealthier Gulf oil producers are expected to fare better due to deeper reserves, the IMF issued a warning late January to Bahrain that it, too, should cut deficits now reaching 15 percent of economic output, which have weakened investor sentiment, Reuters reported.