Sunday 26 June 2016

Uruguay and World Bank announce oil hedging plan

Uruguay has announced the completion of an oil hedging programme.

It has been implemented with the help of the World Bank and it aims to protect the country’s oil sector from changes in prices.

It covers around half of Uruguay’s total annual oil imports for the next 12 months and will help moderate the impact of significant oil price increases on the country's fiscal budget and the overall economy.

The partnership, which will run through 2020, is focused on achieving sustainable growth "in an increasingly complex environment".

The World Bank said it’s the first transaction of this kind between an emerging economy and the institution.

Danilo Astori, Minister of Economy and Finance of Uruguay said: "As a net crude oil importer country, oil price increases can have a big impact on individual consumers, on businesses and on the government's budget. Protecting the economy against global volatility is a key pillar of the government's risk-management framework, underpinning macro-financial resilience and reducing fiscal risks. The support and active involvement of the World Bank was instrumental in setting up this full-fledged oil hedging programme, providing technical expertise to manage it and sustain it over time."

In the UK, the number of jobs lost due to the downturn in the oil and gas industry could reach 120,000 by the end of 2016.