How High Oil Prices Are Affecting Africa
A comparative look at debt relief and spending on oil and human services in countries hit hardest by high world oil prices
This study looks exclusively at African countries that have qualified for debt relief under the multilateral Heavily Indebted Poor Countries Initiative and that import 100 percent of their petroleum supplies. As part of the HIPC qualification process, countries are required to invest debt savings in poverty reduction programs. The relative gains from these programs, argues the Center for American Progress, are being undermined by the additional cost of importing oil during the recent years of high oil prices.
Projected debt savings for 2007 considers debt savings for the 2007 calendar year through HIPC and the subsequent Multilateral Debt Relief Initiative, an initiative that follows on HIPC to deliver expanded relief. Projections combine estimated debt relief from the International Development Association of the World Bank, the International Monetary Fund, and the African Development Bank. Debt owed to these three lenders constitutes the large majority of the assistance provided. Data is available from the International Monetary Fund and International Development Association in their Heavily Indebted Countries Initiative Statistical Update from August 2006.
Annual oil consumption is estimated using the most recent data available—2004 and 2005 rates—from the U.S. Energy Information Administration and CIA World Factbook. Calculations assume 2004 and 2005 consumption levels are representative of levels in 2001 and 2007. The world price of oil is estimated by averaging weekly world spot prices as reported by the Energy Information Administration. For 2001 this is $22.73/bbl. The projected world price for 2007 is the average of weekly world spot prices as of 06/01/07, or $58.49/bbl. The increase in cost of oil from 2001 to 2007 denotes a 157 percent increase.
Gross domestic product figures used in this study are 2006 estimates of the official exchange rates as made available on the CIA’s World Factbook. Calculations assume 2006 GDP levels to be representative of levels in 2007. Public health expenditure as percent GDP uses data from 2003, the most recent available as provided by the 2006 UN Human Development Report. Poverty reduction expenditures are projections for 2007 from the International Monetary Fund and International Development Association in their Heavily Indebted Poor Countries Initiative Statistical Update from March 2006.
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