International Monetary Fund Managing Director Christine Lagarde on Saturday called on central African states to trace a new pathway to growth as oil prices plummet on the international market.
“With oil prices projected to remain low for long and oil reserves depleting, macroeconomic stability will hinge on smart fiscal policies and determined structural reforms to strengthen the business climate and regional integration,” Lagarde said in Douala during a visit to Cameroon.
“It will require the region to open up to its neighbours and tap into their markets to regain momentum,” she added.
Oil prices have dropped by close to 70 per cent since June 2014 – from a peak of 120 dollars per barrel to 32 dollars, according to figures given by Lagarde.
Oil currently represents about 70 per cent of the exports and more than a third of the fiscal revenues of the Central African Economic and Monetary Community (CEMAC), the IMF chief said in a speech in the capital Yaounde on Friday.
“The good news is that several CEMAC members have used the windfall from oil revenues to remove long-standing impediments in the economy,” she added.
Lagarde advised CEMAC countries to carefully consider spending priorities, to reduce discretionary tax and customs exemptions, and to increase regional trade.
Business taxes and red tape at ports still formed huge obstacles to trade, economics professor Fondo Sikod told dpa. “We need rapid reforms in these areas,” he added.