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Business News of Monday, 23 March 2020

Source: Class FM

Draw a new 2020 budget - ACEP to government


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The African Center for Energy Policy (ACEP) is urging the government to draft a new budget in the wake of the COVID-19 outbreak.

According to the policy think tank, a mid-term budget will be too late for many countries to accommodate the full effect of oil price drop and the impacts of COVID-19 outbreak on the national budget.

In its analysis of the implications of the COVID-19 on oil price, ACEP said “A new budget that accounts for the extraordinary drop in oil prices is required for oil producing countries in Africa.

“It is encouraging to see that Algeria has already recognized this fact and is preparing a supplementary budget that will help manage the effects of low oil price.

“This also recognizes that a mid-term budget will be too late for many countries to accommodate the full effect of oil price drop and the impacts of COVID-19 outbreak on the national budget.”

It added that in the future, governments must implement significant countercyclical mechanisms.

“An option will be for governments to have stabilization funds with an adequate buffer that is capable of smoothening significant shortfalls in the budget. Also, hedging portions of oil outputs will minimize the impacts of oil price volatility on national budgets”, it added.

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