A CRUDE AWAKENING
AFRICA
These are sobering times for Africa’s two biggest oil producers. Oil previously provided 80 percent of government revenue in Nigeria and 70 percent in Angola. Nigeria’s 2016 budget is double that of 2015 and based on $38 oil, so the government plans to borrow heavily. Angola’s budget is based on a price of $40, down from an earlier benchmark of $81. Both countries’ currencies have plunged against the dollar. The depreciation has resulted in higher food prices. Now both countries are trying to diversify their economies. Nigeria’s government has vowed to focus more on agriculture, mining and massive infrastructure developments to create jobs. The two countries will reap some savings by cutting fuel subsidies. RUSSIA
Russia’s economy shrank by 3.7 percent last year, its worst contraction since 2009. Oil and gas together contribute about half of state revenues. The government now anticipates cuts to the budget for fiscal 2016, which is based on an oil price of $50 per barrel. Poorer Russians are already feeling the squeeze from falling wages and last year’s rapid rise in food prices, driven by Russia’s “anti-sanctions” ban on Western food. There is government talk of partly privatizing state companies, but powerful state corporation bosses likely would object. Meanwhile, costly plans to drill in the Arctic, once a source of pride for the Russian government, are on ice. Even so, Russian oil production hit a post-Soviet high of 11.1 million barrels a day in 2015, according to the International Energy Agency, which expects production to tail off somewhat as 2016 proceeds.