GCC countries make “substantial progress” on oil prices decline – IMF

WASHINGTON, June 9 (KUNA) — The International Monetary Fund (IMF) said on Wednesday that Gulf Cooperation Council states have made “substantial progress” in facing the impacts of the drop in oil prices, particularly on “fiscal consolidation.” Lower oil prices have pushed up borrowing costs, reduced bank liquidity, dampened credit growth and poses financial stability risks, while the conflicts in the Middle East and North Africa (MENA) region continue to cause severe economic damage, read an IMF report.
The 51-page report mentioned that a sizable “fiscal, external, financial, and structural” policy adjustment is needed to face the “serious and persistent impacts” of the drop in oil prices.
“Most GCC oil exporters enter this challenging period from a position of strength, having built up large financial buffers during the years of high oil prices.
“These resources can be drawn down in the coming years to smooth out – but not avoid – the adjustment to lower oil revenues,” it added.
However, the fiscal outlook remains “challenging despite the consolidation measures adopted so far, and additional sustained policy effort will be needed over a number of years,” it said.
“Policymakers will need to be proactive in addressing the challenges posed by lower oil prices for the financial system, and should step up structural reforms to boost medium-term growth prospects.” It said that deep structural reforms are necessary to improve medium-term prospects and facilitate much-needed diversification in order to create jobs for the growing labor force.
Outside the hydrocarbon sector, GCC countries have a number of key enterprises that might gain from privatization, like utilities, it mentioned. (end) sd