Moody’s issued a report this week saying that West Africa’s worst-ever outbreak of Ebola threatens to have significant economic and fiscal ramifications for a number of sovereigns in the region.
“Critical commercial and transport disruptions that we expect will last for at least the next month will exact an economic toll in Guinea (unrated), Liberia and Sierra Leone, with the majority of border crossings in all three countries either closed or only allowing limited public and commercial traffic,” Moody’s said in the report
The outbreak risks having a direct financial effect on government budgets via increased health expenditures that could be significant, and an indirect effect arising from an Ebola-induced economic slowdown on government revenue generation in a region where budgets are already hindered by low tax collection, according to Moody’s.
Sierra Leone’s economic growth would decelerate from the 16 percent growth rate recorded in 2013 if mining sector production is affected by Ebola.
If a significant outbreak emerges in the Nigerian capital of Lagos, Africa’s most populous city, the consequences for the West African oil and gas industry would be considerable.
“Nigeria is the largest oil producer on the continent. A major outbreak would impair the indigenous workforce and likely prompt international oil companies to evacuate their expatriate personnel, resulting in significantly curtailed oil production,” Moody’s said.
With Nigeria as the world’s 12th-largest oil producer and oil accounting for more than 85 percent of exports and roughly two thirds of Nigeria’s fiscal revenues, any material decline in production would quickly translate into economic and fiscal deterioration.