Oil exporting and importing nations in the region have taken steps to cut government spending and had reduced their expensive subsidy programs for such things as petrol, electricity, gas, and water, which have tended to benefit mostly the rich.
“Despite these improvements, prices for these utilities are still well below international standards, so policymakers could go further in reforming their energy pricing frameworks,” the IMF report stated.
The GCC nations are also planning to introduce a value-added tax in 2018.
“These are all welcome moves and underline how committed these countries are to adjusting to the current difficult economic environment,” Ahmed said.
However, he added that over the next 12 months, and well into the future, more needed to be done.
Private sector expansion
“A key challenge would be not only boosting growth while tightening budget expenditures, but also maximizing the returns from what room countries have available for public spending.
“Investment in infrastructure, education, and health care would continue to be three key areas where public expenditures could be most effective in building sustainable, long-term growth,” Ahmed said.
More broadly, the IMF recommends that given the environment of lower oil prices, countries need to make greater progress toward more diversified, dynamic, private-sector driven economies.
“For oil exporters, this will include relying less on oil revenues while creating job opportunities for new labour market entrants in the private, rather than public sector,” Ahmed said.
“The economic transformations that are made now will have the potential to provide resilient and inclusive growth for generations to come,” he added.
