In a recent post on the Financial Times BeyondBRICs blog, NRGI authors Thomas Lassourd and David Manley describe 10 consequences of lower oil and metal prices for resource-rich countries. Read the whole post here. (Viewing the post is free, although registration is required.)
The consequences identified are:
- Budget deficits and increased borrowing
- Painful fiscal adjustments and the need for systems to manage them
- Lower exchange rates: higher inflation, and opportunity for non-oil exports
- Opportunity for fuel subsidy reform
- Higher carbon-based fuel consumption
- Lower capital investment, and delayed or canceled projects
- Lower rent generation and pressure for fiscal incentives to maintain investment
- Risks and opportunities for state-owned enterprises
- Important governance reforms could be under threat
- Rise in political competition that could worsen repression and conflict
