NEW YORK - Most developing nations that import oil
will gain more from the impact of falling oil prices on the
industrialized world than from direct savings on their own fuel
costs, bankers and economists say in assessing the effects of the
price slump on the developing countries.
""The real issue is the impact of the price cuts on the growth
rates in the industrial world and on interest rates,'' said Christine
Bindert, a senior vice president at Shearson Lehman Brothers Inc. who
has worked as an economic adviser for several Latin American
To be sure, developing nations - just like the United States and
other industrialized countries - cannot know just how much they will
benefit from falling oil prices until they see how far the price
decline goes and how long it lasts.
Nonetheless, economists estimate that the decline in prices should
add between 0.5 percent and 1 percent to the growth rate of the
economies of industrialized nations this year. That should in
turnincrease demand for Latin American, African and Asian
manufactured goods and commodities.
It may also ease pressures in Congress and the European Economic
Community for protectionist trade measures that limit the export of a
wide variety of goods from developing nations.
At the same time, the decline in oil prices lowers inflation
rates, which could lead to a fall in interest rates. How much that
could help the developing countries varies, depending on how much of
their debt is owed to commercial banks, as opposed to governments and
international agencies. Commercial debt carries a floating interest
rate tied to the rates big banks charge each other for money,while
noncommercial loans are usually at fixed rates.
Thus, countries with large commercial bank debt could save
hundreds of millions of dollars in interest payments if lower
inflation caused interbank rates to fall. By contrast, those whose
debts aremostly to other governments and agencies, such as the
International Monetary Fund, will benefit less.
Some of the same benefits accrue to developing nations that are
net exporters of oil. However, the savings on interest and the
economic stimulus do not entirely compensate for the lost revenue,
according to most economic calculations.
Few major developing countries are heavily dependent on oil
imports. The largest importer among developing nations is Brazil,
which has sharply cut its needs in the last decade by substituting
domestically produced alcohol for some of its gasoline demand and
investing heavily in domestic oilfields.
Brazil's $7.47 billion petroleum import bill in 1984 amounted to
about 49 percent of its total imports, according to the IMF. Banking
sources say that bill was cut to slightly more than $6 billion last
year, as the country met 56 percent of its oil needs domestically.
Brazilians predict they will meet 74 percent of their oil needs this
year, and cut the import bill to $3 billion.
While some economists predict that falling oil prices could
annually save Brazil billions of dollars, they point out that the
savings will be considerably less for other oil-importing countries. …