How should African countries react?
The overall negative net impact of the crisis on external current account projections for 1998 is estimated to have ranged between 1.0 and 2.5 percentage points of GDP for nine oil-importing countries in sub-Saharan Africa, but to have been considerably smaller (or, in some cases, even positive) for all the other countries in this group. Only four oil-importing countries are estimated to have suffered negative fiscal effects greater than 0.2 percentage point of GDP. The majority of oil-importing countries should thus be able to absorb the effects of the international crisis in 1998 by undertaking relatively manageable budgetary adjustments combined with some drawdowns of international reserves or by increasing domestic and external deficit financing. The process of macroeconomic adjustment, fiscal consolidation, and structural reform that has been under way for several years in many of these countries is thus unlikely to be derailed. By contrast, the 30 percent plunge in oil prices sin
