The International Monetary Fund estimates the Middle East’s oil-dependent economies have missed out on $390 billion in oil revenues last year alone and face up to $150 billion in income losses this year as a result of cheap oil prices, the Wall Street Journal reports.
To overcome these gaping budget deficits, Persian Gulf countries have introduced a raft of measures ranging from cutting energy subsidies to raising taxes. Some, such as Saudi Arabia, have also burned through their foreign reserves or started to borrow internationally to ease the fiscal pressures.
“2016 is year number two in a multi-year adjustment process to reach balanced budgets,” the director of the IMF’s Middle East and Central Asia Department, Masood Ahmed, said.
“Probably another four to five years of action will be needed both on spending and on revenues before reaching a comfortable fiscal situation for many countries,” he believes.
Economic growth for the region’s oil exporters is set to rise to 3% in 2016 from 2% last year but that is mainly due to the improved prospects of Iraq, which increased oil production, and Iran, which is looking to benefit from the gradual lifting of sanctions, the IMF said.
