afrol News, 17 June - International Monetary Fund (IMF) is to prepare an analysis of real and financial factors behind the recent surge in oil and commodity prices, a task that would also ease fears over at stop to the promising growth in sub-Saharan Africa.

With some of the top oil producers emerging in Africa, external shocks, mainly the slow-down in developed economies, has been one huge worry in growth projection estimated to average 10 percent in 2008.

IMF Managing Director Dominique Strauss-Kahn has said, following the G8 meeting on 13-14 June, in Osaka, Japan, that as part of analysis, the IMF would look into possible role of financial market speculation in recent price hikes.

"How important it is and what kind of influence it has on the market and futures is something we have to investigate," he told reporters.

He however said it was not clear if speculators were a factor, but that some G8 ministers wanted this looked into. He maintained the IMF expected the slowdown in world economy to rein in oil prices that have touched record highs.

Responding to a call by the Group of Eight, Mr Strauss-Kahn said that as part of the analysis, IMF would look into possible role of financial market speculation in recent price hikes. "Even if the slowdown is not going to be deep, it is going to be protracted," managing director said.

The meeting in Japan was in preparation for G8 Summit in that country in July. G8 ministers of finance had at the meeting called on IMF to look into high oil and food prices, their volatility and effects on global economy.

In many sub-Saharan Africa countries, high commodity prices have already sparked violence and discontent amongst citizens who feel their countries are not doing enough. Food price protests are a new phenomenon in some of the worst hit sub-Saharan regions, while humanitarian agencies are also struggling to meet demands because of non-availability of stocks, continuing violence, especially in the Somali region and persistent droughts in most parts of the continent.

The IMF had earlier this year warned that a pronounced global slowdown would weaken prices of non-oil commodities and represent a large shock for the region while at same time, higher oil prices would reduce domestic demand, boost headline inflation, and worsen the current account and net foreign asset positions of net oil importers. The Fund further forecast that less favourable financial conditions would reduce external financing and put brakes on growth.

In addition to these external risks, the IMF pointed out that sub-Saharan Africa faced significant internal risks, saying though conflicts had declined in recent years, they still ravage some regions thereby undermining investor confidence and could delay donor support and stall structural reforms that are needed to sustain recent growth.

"While improved performance is encouraging, the region still has a lot of catching up to do if it is to achieve the Millennium Development Goals," the IMF warning concluded.

By Lawrence Keketso

© afrol News

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