Bloomberg Nigeria
AFRICAN nations had to consider cutting fuel subsidies and oil exporters to curb spending as a slump in crude prices took its toll on government revenue, International Monetary Fund (IMF) managing director Christine Lagarde said.
Subsidising countries “should think about reducing and phasing out the oil subsidies, taking advantage of the oil price and using public finance more wisely than in undifferentiated energy subsidies,” Lagarde said on Wednesday in the Rwandan capital, Kigali.
“For the exporting countries that are clearly taking a hit on both accounts of reduced trade revenues and reduced public revenues, they have to be very cautious with public spending, and reduce what can be reduced and use whatever is left over as buffers.”
Fuel subsidies in Nigeria cost as much as $7 billion (R81bn) a year, while in Angola the government is seeking to lower subsidies to 1 percent of gross domestic product from 4.5 percent.
The IMF last week lowered its 2015 economic-growth outlook for sub-Saharan Africa to 4.9 percent from a previous estimate of 5.8 percent in October, citing “shocks” to oil-producing economies from falling prices. The growth forecast for Nigeria was lowered to 4.8 percent from 7.3 percent.