IMF: Saudi Arabia Could Be Broke in 5 Years From Turmoil
Image: IMF: Saudi Arabia Could Be Broke in 5 Years From Turmoil A fisherman pulls in his net by an oil tanker at port in Duba, Saudi Arabia. (REUTERS/Mohamed Al Hwaity)
By Clyde Hughes | Friday, 23 Oct 2015 09:08 AM
The International Monetary Fund predicts Saudi Arabia could be broke and have a fiscal deficit of 21.6 percent of its gross national product in five years.
In a gloomy regional outlook report, the IMF said the region is suffering from long-running regional conflicts, such as violent unrest in Iraq, Syria, Libya and Yemen, along with the double-whammy shrinking oil prices, according to CNBC.
"Because the oil price drop is likely to be large and persistent, oil exporters will need to adjust their spending and revenue policies to secure fiscal sustainability, attain intergenerational equity, and gradually rebuild space for policy maneuvering," the IMF said, adding that current plans by the region's oil exporters "are currently insufficient to address the large fiscal challenge."
The IMF said if the fighting there continues, it "would reduce growth in the affected countries, with adverse spillovers to the region and beyond."
Saudi Arabia's outlook was particularly bleak, said Bloomberg Business, with the IMF saying the country could run out of financial assets it needs to support the country's spending in five years.
The IMF said that along with this year's budget deficits, the Saudi's could see another budget deficit of 19.4 percent in 2016 if they keep spending at the current rate, said Al Jazeera.
"For the region's oil exporters, the fall in prices has led to large export revenue losses, amounting to a staggering $360 billion this year alone," Masood Ahmed, the IMF's Middle East director, told reporters in Dubai.
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The IMF report stated that Bahrain and Oman could face the same fate as Saudi Arabia, but Gulf members like Kuwait, Qatar and the United Arab Emirates have more secure assets that could support those countries for more than 20 years, said Bloomberg.
"Saudi authorities are already planning spending cuts as the world's biggest oil exporter seeks to cut its budget deficit," wrote Bloomberg's Ahmed Feteha. "Officials have repeatedly said that the kingdom's economy, the Arab world's biggest, is strong enough to weather the plunge in crude prices as it did in similar crises, when its finances were under more strain."
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