IMF says it's encouraged by Gulf's economic reform plans

Mon Apr 25, 2016 12:46am EDT
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By Andrew Torchia

DUBAI (Reuters) - The International Monetary Fund said it was encouraged by the efforts of Saudi Arabia and other Gulf Arab oil exporters to repair damage to their state finances as low crude prices slash export revenues.

"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 was speaking hours before Saudi Arabia's government was due to announce on Monday a sweeping plan to ensure its economy could survive an era of cheap oil, including spending cuts, tax rises and policies to expand the private sector.

Ahmed said that judging from details of the Saudi plan revealed so far, it appeared "ambitious and comprehensive". The scale of the plan "measures up to the challenge facing the economy", he said.

Six months ago the IMF warned that budget reforms being considered by most of the Middle East's oil exporters were likely to be inadequate, and that countries risked running through their financial reserves.

"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 IMF said in a report at that time.

Its latest report on the region, published on Monday, did not repeat that warning, though it said countries still needed to do more to cut budget deficits, rebuild their financial reserves and save enough money for future generations.

Ahmed said Gulf states would still face difficult decisions in carrying out budget reform plans on a sustained basis, and in trying to create millions of jobs for growing populations while reducing the dependence of their economies on oil.   Continued...

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. REUTERS/Yuri Gripas