International Monetary Fund Warning: Saudi Kingdom May Be Bankrupt By 2020
The IMF's Middle East economic outlook report disclosed that the country might become bankrupt in five years if Saudi Arabia does not improve its current financial policies.
"Under current policies, countries would run out of buffers in less than five years because of large fiscal deficits," the report said, according to Gulf Times. Moreover, the economic growth in the oil-exporting Gulf Cooperation Council region is expected to get slower due to contact fall in oil prices.
"The budget deficit in Saudi Arabia does go down substantially as a share of GDP over the next five years but it still remains high over this period, all the more reason to identify ways in which it can be brought down further to a more manageable level," said Masood Ahmed, IMG's regional director for Middle East and Central Asia, according to Sputnilk.
Last month, Saudi finance minister Ibrahim Alassaf did drop some hints on bold steps to be taken by the government, such as "cutting expenses and scrapping some projects" in order to cover the fiscal deficits gap.
"The pace of fiscal consolidation poses a risk to GCC growth prospects, if the chosen mix of adjustment policies leads to a larger-than-expected decline in domestic demand. Further, risks relate to potential structural reform fatigue as the effects of the fiscal consolidation filter through to the wider economy," he said, according to Gulf News.
Ahmed added that "Washington-based lender" wants the Gulf States to arrive at a few hard political decisions, in order to control the inflated deficits.
