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

Weathering the Storm So Far : The Impact of the 2003-05 Oil Shock on Low-Income Countries
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Volume/Issue:
2006/171
Series:
IMF Working Papers
Author(s):
Helaway Tadesse, Mark Lewis, Jörg Zeuner, James John, Luzmaria Monasi, and Paolo Dudine
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
July 2006
DOI:
http://dx.doi.org/10.5089/9781451864311.001
ISBN:
9781451864311
ISSN:
1018-5941
Page:
33
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.
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