(EnergyAsia, January 23 2015, Friday) — The oil-exporting countries in the Middle East, North Africa, Afghanistan and Pakistan (MENAP) and the Caucasus and Central Asia (CCA) regions will lose an estimated total of US$300 billion in export revenues this year as a result of the oil price collapse, said the International Monetary Fund (IMF).
The price of Brent crude has fallen from a high of US$115 a barrel last June to less than US$50 this week, with some analysts forecasting further declines in the months ahead.
But, net consuming countries will have little to celebrate either as demand for their goods is falling, eroding “the windfall gains from lower oil import bills,” said the fund in an update of its economic outlook for the regions on January 21.
It expects the collapse oil priced to lead to “significant declines in the fiscal balances of oil exporters in the MENAP and CCA regions.”
Except for Kuwait, Qatar, and Turkmenistan, the countries in MENA are expected to run fiscal deficits in 2015.
For countries in the CCA, the impact of lower oil prices is compounded by the deepening recession in Russia, to which the region is closely linked through trade, remittances, and foreign direct investment, the report said.
The fund advised oil exporters to “avoid abrupt spending cuts” and importers to “treat savings from lower prices as transitory.”
For this year, it said most oil exporter governments have the financial resources to avoid a steep reduction in their spending plans.
However, over the medium term, they would need to “gradually but decisively adjust their fiscal positions to ensure sustainability and intergenerational equity,” said Masood Ahmed, the fund’s Middle East director at a press conference in Washington DC.
“Importing countries are well-advised to avoid entering into spending commitments that would be hard to reverse if oil prices returned to higher levels,” he added.