The IMF added that Nigeria and other nations in sub-Saharan Africa would spend $19bn more on fuel importation as a result of higher oil prices.
The Washington-based lender disclosed this in a report titled, ‘Africa Faces New Shock as War Raises Food and Fuel Costs.’
It said, “Net exporters, like Nigeria, are likely to benefit from rising oil prices, but a fiscal gain is only possible if the fuel subsidies they provide are contained.
“It is important that windfalls are largely directed to strengthen policy buffers, supported by strong fiscal institutions such as a credible medium-term fiscal framework and a strong public financial management system.”
According to the IMF, countries in Sub-Saharan Africa are facing a surge in food and fuel prices as a result of Russia’s invasion of Ukraine. It stated that regional inflation is expected to remain at 12.2 per cent in 2022 and 9.6 per cent in 2023.
It said this is the first time regional average inflation is that high since 2008. The moneylender stated, “Prices for food, which account for about 40 per cent of consumer spending in the region, are rising rapidly.
“Around 85 per cent of the region’s wheat supplies are imported. Higher fuel and fertilizer prices also affect domestic food production. Together, these factors will disproportionately hurt the poor, especially in urban areas, and will increase food insecurity.
“Higher oil prices will boost the import bill for the region’s oil importers by about $19bn, worsening trade imbalances and raising transport and other consumer costs. Oil-importing fragile states will be hit hardest, with fiscal balances expected to deteriorate by around 0.8 per cent of gross domestic product compared to the October 2021 forecast—twice that of other oil-importing countries.
“The region’s eight petroleum exporters, however, benefit from higher crude prices.” It added that rising oil prices will represent a direct fiscal cost for countries through fuel subsidies, and nations might be unable to remove these subsidies as a result of inflation.
