IMF: GCC na­tions on track to cut bud­get deficits

New Straits Times - - Business -

the prob­lem was mooted by Arvind Subra­ma­nian and other ad­vis­ers to the fi­nance min­is­ter in In­dia’s an­nual Eco­nomic Sur­vey in Jan­uary.

State-run banks will need more than the 700 bil­lion ru­pees (RM47.19 bil­lion) that the gov­ern­ment planned to in­fuse un­der a DUBAI: Oil-ex­port­ing Arab states of the Gulf are head­ing “in the right di­rec­tion” to plug bud­getary gaps thanks to fis­cal re­forms, but more change is still nec­es­sary, said the In­ter­na­tional Mone­tary Fund (IMF) yes­ter­day.

“If they con­tinue on this path in the next three to five years, the level of deficit will be less than two per cent” of gross do­mes­tic prod­uct, said IMF re­gional chief Ji­had Azour.

“This is go­ing in the right di­rec­tion,” said Azour, who yes­ter­day launched the IMF up­date for its re­gional Eco­nomic Out­look for the Mid­dle East and cen­tral Asia.

Rev­enues in the oil-de­pen­dent economies of the six Gulf Co­op­er­a­tion Coun­cil (GCC) states have nose­dived since the price of crude plum­meted from its mid2014 peak, forc­ing the monar­chies to cut ex­pen­di­ture.

Such cuts have in­cluded en­ergy sub­si­dies in na­tions that have tra­di­tion­ally sub­sidised main ser­vices both for their own cit­i­zens and also for large pop­u­la­tions of ex­pa­tri­ate work­ers.

“Fis­cal ad­just­ment is still needed. Ad­di­tional re­forms are still needed, es­pe­cially on the struc­tural side,” said Azour. AFP re­vamp plan pro­posed in 2015, said Pana­gariya. “Since then, the scale of NPAs has grown,” he said.

Past at­tempts to solve the prob­lem by in­ject­ing cash into banks to boost their cap­i­tal buf­fers haven’t led to a re­vival of loan growth. Bloomberg

BLOOMBERG PIC

Rid­ding In­dia’s bank bal­ance sheets of bad loans is cru­cial to fur­ther­ing Prime Min­is­ter Naren­dra Modi’s goal of cre­at­ing more jobs in the US$2 tril­lion econ­omy.

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