IMF Praises Saudi Arabia for Its Reform Efforts

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.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza