The International Monetary Fund has applauded the efforts that Saudi Arabia and other Gulf Arab oil exporters have put in place to fix the damage that has been caused to their state finances due to reduced income from oil exports.
“I do see in a number of countries action to address the budget deficit,” Masood Ahmed, director of the IMF’s Middle East and central Asia department, said in an interview. “That gives us encouragement and comfort.”
He spoke a few hours before Saudi Arabian government announced a sweeping plan that will see the economy survive the duration of cheap oil. The plan entails tax rises, spending cuts and policies to see the private sector expands.
Ahmed said that the present judgment of the Saudi Arabia plan is that it is “ambitious and comprehensive.”
The IMF warned six months ago that the Middle East countries were risking running through their financial reserves due to their budget reforms.
The IMF report said that “Apart from Kuwait, Qatar, and the United Arab Emirates, under current policies, countries would run out of buffers in less than five years because of large fiscal deficits.”
The latest report published regarding the region did not repeat the warning, but said that the countries should concentrate more on cutting budget deficits, rebuilding their financial reserves and save enough money for future generations.
If the leaders focus on the Gulf economic reforms, the countries are likely to evade running into financial challenges.