DUBAI, United Arab Emirates (AP) — Higher oil prices are helping to offset increases in public spending by the Middle East's oil exporting heavyweights like Saudi Arabia, with these countries narrowing their budget deficit by $77 billion, the International Monetary Fund said on Tuesday.
The findings, which came in the IMF's new regional outlook report, said the overall fiscal deficit for the Mideast's oil exporters is projected to decline from around $118 billion last year to $41 billion this year, before narrowing to $3 billion in 2019.
The rosier outlook, however, is not consistent across the region. In Iran, the re-imposition of U.S. sanctions on oil exports is expected to drive up inflation there to more than 40 percent by year's end.
The IMF also cautions that global oil prices, while potentially buoyed in the near-term by a cut in Iranian oil supply, are projected to slide down to around $60 a barrel by 2021.
Benchmark Brent crude, which had been trading above $80 a barrel recently, now hovers around $70 after some U.S. sanctions waivers for countries that import heavily from Iran, which accounts for 5 percent of global oil exports.
"For Saudi and other GCC countries, we believe it's not now the time to be complacent," said Jihad Azour, the IMF's Mideast and Central Asia director, referring to other Arab oil-exporting countries in the Persian Gulf.
The IMF is urging oil-exporters in the region to curb subsidies to reduce spending, introduce more taxes to boost revenue and narrow the public sector wage bill by attracting foreign investment and encouraging the private sector to create more jobs.
The report warns that at least 25 million new jobs need to be created in the next five years to keep unemployment rates the same across the Middle East, Afghanistan and Pakistan.
Azour said a country like Egypt, where economic growth this year and last exceeded 5 percent, needs to create 700,000 to 1 million new jobs per year to keep it's unemployment rate from rising.
