By MAIMBOLWA MULIKELELA in Washington, USA –
THE International Monetary Fund (IMF) has said lower oil prices on the global market offer Zambia and other importers of the commodity an opportunity to reform their energy taxation systems.
The latest IMF World Economic Outlook report for 2015 issued in Washington DC yesterday stated that the current environment of low oil prices provided a unique opportunity to undertake politically difficult reforms to eliminate remaining fuel subsides.
“Lower oil prices offer an opportunity to reform the energy taxation but also the energy subsidies,” the report said.
Developing countries had an important structural reform agenda which included measures to support capital accumulation such as removing infrastructure bottlenecks, easing limits on trade and investment as well as improving business conditions.
The IMF recommended increased labour force participation and productivity through reforms to education, labour and product market.
The report said oil importers’ policy stance should also strike the right balance between promoting growth and preserving stability.
“In many emerging markets and developing economies, macroeconomic policy space to support growth remains limited. In oil importers, however, lower oil prices will reduce inflation pressure and external vulnerabilities and in economies with oil subsidies, lower prices may provide some fiscal space or where needed, scope to strengthen fiscal positions,” the IMF said.
It said those with fiscal space could allow public spending to adjust gradually to lower oil revenues.
Lower oil prices reflected to a significant extent supply factors providing a boost to growth globally and in many oil importers but weigh on activity in oil exporters.