IMF warns of deficit risk for Gulf states after Arab uprisings

For excessive spending. Bahrain in deficit, Riyadh at risk from 2018

13 November, 19:25

    (ANSAmed) - DUBAI - Oil-rich Gulf monarchies are likely to see a budget gap starting in 2016 unless they begin reducing spending based on oil revenue estimates, warns the International Monetary Fund. The IMF said in a report released this week that oil-producing nations outside of the Gulf Cooperation Council (GCC), such as Libya and Iraq, are also at risk. At the current rate of government spending and the price of crude oil at 120 dollars per barrel, Bahrain is already experiencing a deficit and Oman is expected to do so in 2015.

    Saudi Arabia would instead be in the red as of 2018, according to IMF calculations. Libya and Iraq will continue to see a surplus at least until 2014, but an expected drop in oil production could lead to revenue too low to balance the spending immediately afterwards. Government spending by Middle Eastern states rose sharply following the Arab uprisings that shook the entire region starting in 2011. Many governments chose to modernise and develop infrastructure to better serve their populations, while at the same time raising wages and creating a stronger social safety net for the unemployed. Some countries, such as the United Arab Emirates, have already revised their budgets to prevent a deficit. However, the IMF holds that the revisions are not quick or effective enough to mitigate the risk. (ANSAmed).

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