IMF: Saudi Arabia will be broke in 5 years

Baku. 23 October. REPORT.AZ/ Saudi Arabia may run out of financial assets needed to support spending within five years if the government maintains current policies, the International Monetary Fund said, underscoring the need of measures to shore up public finances amid the drop in oil prices.

The same is true of Bahrain and Oman in the six-member Gulf Cooperation Council, Report informs the IMF said in a report. Kuwait, Qatar and the United Arab Emirates have relatively more financial assets that could support them for more than 20 years, the Washington-based lender said.

Saudi authorities are already planning spending cuts as the world’s biggest oil exporter seeks to cut its budget deficit. 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.

But the IMF said measures being considered by oil exporters “are likely to be inadequate to achieve the needed medium-term fiscal consolidation," the IMF said. “Under current policies, countries would run out of buffers in less than five years because of large fiscal deficits."

The kingdom’s net foreign assets fell for a seventh month to $654.5 billion at the end of August. Saudi Arabia has raised 55 billion riyals ($14.7 billion) from debt issuance this year. The IMF expects the debt-to-GDP ratio to grow to 17 percent next year.

Saudi Arabia has led the Organization of Petroleum Exporting Countries in boosting production to defend market share even as prices plunged below $50 a barrel, abandoning its previous role of cutting output to boost prices.