Weathering the Storm So Far: The Impact of the 2003–05 Oil Shock on Low-Income Countries

Helaway Tadesse, Mark Lewis, Jörg Zeuner, James John, Luzmaria Monasi and Paolo Dudine

No 2006/171, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the impact of the 2003-05 oil price increase on the balance of payments positions and IMF financing needs of low-income country oil importers. It finds that stronger exports reflecting favorable global conditions, a compression of oil import volumes due to the pass-through of world prices to domestic consumers, and a large increase in capital inflows helped low-income countries cope with the oil price shock. Preliminary data suggest that reductions in oil import volumes have not harmed growth. While fiscal balances generally improved, quasi-fiscal liabilities may be building. Lower demand for IMF assistance may reflect broader trends, but further oil price increases could put pressure on additional countries in 2006 and beyond.

Keywords: WP; GDP; price; balance of payments; current account (search for similar items in EconPapers)
Pages: 33
Date: 2006-07-01
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