How Africa can survive oil price crash, by IMF

To survive the global crash in crude oil prices, African countries whose economy are tied to the sale of the product will need to address fuel subsidy, cut 2015 expenditure profile, increase in tax rate and exchange rate flexibly where possible
This was the submission of Mr. David Robinson, the Vice-Director of the International Monetary Fund (IMF) while speaking at the IMF Africa Caucus meeting held in Angola.
He said the fall in oil prices is a significant negative shock for the oil exporting countries which have had to make marked adjustments.
Robinson, who presented the theme “Africa: Regional Economic Outlooks” pointedly said that public financial measures countries affected by crash in oil prices can adopt include “budget cuts in the 2015 expenditure, above all in investments, fuel subsidies reform, taxation measures, including tax rate increases, and greater exchange rate flexibility wherever possible”.
Robinson noted that the oil producing countries have to tackle issues such as the orderly implementation of spending cuts, prioritise social sectors and infrastructure and mobilise non-oil revenues.
According to him, it is necessary to address low liquidity in the foreign exchange markets in countries with flexible arrangements and the absence of foreign exchange instruments in countries whose currency is indexed to the Euro.
The forum of Africa caucus of the International Monetary Fund/World Bank Group in its deliberation urged Africa leaders to take immediate action to combat illicit financial flows in Africa. The forum assembles more than nineteen Ministers of Finance and fourteen Governors of the Central Banks of Africa countries.
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Speaking at the forum The President of the African Group and Minister of Finance of Angola, Armando Manuel, declared in the welcoming speech to the participants at the Luanda Caucus- 2015 meeting that the development of the continent continues to be affected by insufficient resources
He said “This obliges us to look for other sources of financing including savings that can be made from restricting illicit financial flows from Africa, especially measures that can be taken to radically reduce these mass monetary outflows and guarantee that they are used for development in the African continent”.

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Also in his opening speech Manuel Vicente, representing the President of Angola, José Eduardo noted that African countries must have a more comprehensive outlook, integrating the diversification of the economy based on national and regional value chains in potential competitive sectors.
“In truth, we have to add more value to our resources, whether in the directly productive activities, or through infrastructure and additional or supporting activities such as, transport and telecommunications systems, banking and financial systems generating integrated development hubs”, he said.

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