News & Analysis: Oil prices
“Central and commercial banks across Africa are working together to increase liquidity and improve access to finance in an effort to keep the economies within which they operate functioning during the COVID-19 lockdown.”
“The economic challenge of the global COVID-19 crisis has hit Nigeria hard, making the country enter its worst recession in four decades.”
“It is worth considering what it would take for any of these strategies to work, and more crucially, whether the current pandemic and the global after-shock affect how they might be implemented.”
“The economic fallout for the continent from COVID-19 is likely to be severe and enduring. This burden falls heavily on countries with a high dependence on commodity exports to China, weak sovereign balance sheets, high debt burdens, and volatile currencies, among other external fragilities.”
“The economic toll, both through lockdowns and external shocks, will have a staggering effect on African economies. Our forecast of average African real GDP growth in 2020 was revised down from 3.8 percent in October 2019 to -2.8 percent currently. For African oil exporters (8 SSA oil exporters, Algeria and Libya), it was a revision from 2.5 percent to -5.2 percent.”
“Central Africa countries announced various stimulus packages to alleviate the impact of the crisis on the population and on the economy. However, those measures had only redistributive impacts in the very short term, without significant effect on the overall production level.”
“Senegal has been forced to delay its first oil and gas projects by up to two years because of coronavirus, President Macky Sall said, in a sign that aftershocks from the crisis are battering even economies that have avoided the worst of the pandemic itself.”
“When coronavirus forced the world into lockdown, it punched a hole in global oil demand and sent prices crashing to historic lows. The result was an overnight fiscal catastrophe for oil-dependent African economies like Nigeria that were accustomed to building their budgets on oil prices double what they are now.”
“Despite price recovery recorded last week in the international oil market, the Federal Government’s revised 2020 budget revenue stream would suffer significant pressures. This is because Nigeria will have to bear OPEC cut penalty of over 500,000 barrels per day (bpd), while production cost cutbacks has failed to materialize.”
“The global spread of the pandemic and the subsequent collapse of international oil prices are destabilizing Nigeria’s macroeconomic balances.”
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