Nigeria may not benefit from increased oil prices, according to the International Monetary Fund (IMF) if the government does not limit the amount of fuel subsidies it provides to citizens.
Nigeria and other countries in Sub-Saharan Africa will spend $19 billion more on fuel imports as a result of higher oil prices, according to the IMF on Thursday.
The Washington-based lender revealed this in a report headlined ‘Africa Faces New Shock as War Raises Food and Fuel Costs,’
“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,” the report stated.
As a result of Russia’s invasion of Ukraine, countries in Sub-Saharan Africa are experiencing a rise in food and fuel prices, according to the IMF. Regional inflation is anticipated to remain at 12.2% in 2022 and 9.6% in 2023, according to the report.
“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 IMF explained.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
INVESTIGATION: How roadside foods endanger consumers’ life with trans fat in northern Nigeria
With an estimated 854,000 deaths in Nigeria, and 3,229 attributed to trans fatty acids (TFA) -related cardiovascular deaths, ADESOLA IKULAJOLU visited Nigeria’s...
INVESTIGATION: Untold story of Ondo oil producing communities battling poor health system
Access to quality healthcare is one of the nightmares of communities in Ilaje local government area of Ondo State. Despite...
FEATURE: Ogun residents, waste collectors trade blames, as refuse litter environment
TIJANI ABDULKABEER, a journalist from the University of Ibadan, during a recent trip to Sango Otta, Ogun State took a look...
INVESTIGATION: How online fraudsters siphon victims’ funds through ‘SportyBet’ platform
As Nigeria transits into a cashless society, the evolution also creates opportunities for internet scammers to take advantage of unsuspecting...
SPECIAL REPORT: Enugu govt watches as waste takes over state, threatens public health, environment
In this report, Arinze Chijioke looks at how delays in evacuation of waste in Enugu State encourages indiscriminate waste disposal, its health implications, and how...