Low oil prices can bank­rupt de­vel­op­ing na­tions

The Pak Banker - - NATIONAL -

The Pak­istan Econ­omy Watch (PEW) on Sun­day said in­ter­na­tional com­mu­nity should unite to counter threat of low oil prices as it will bank­rupt oil im­port­ing de­vel­op­ing coun­tries be­fore the oil-rich na­tions paving way for an­other in­ter­na­tional cri­sis.

Pak­istan should re­duce ex­pen­di­ture, en­hance ex­ports and fo­cus on value-ad­di­tion as well as in­no­va­tion oth­er­wise it will not be able to thwart de­fault even with the help of IMF, it said. Ac­cord­ing to ex­perts, oil ex­port­ing coun­tries are run- ning large bud­get deficits while Saudi Ara­bia hav­ing over 700 bil­lion dol­lars in re­serves can de­fault by 2020 if the prices of oil re­mained sub­dued.

Re­al­is­ing the threat all the oil ex­port­ing coun­tries are cut­ting ex­pen­di­ture and sub­si­dies, en­hanc­ing taxes, down­siz­ing state-run and pri­vate or­gan­i­sa­tions and plan­ning to slap tax on re­mit­tances which is a threat for coun­tries like Pak­istan de­pen­dent on worker re­mit­tances.

Dr. Mur­taza Mughal said that Pak­istan ex­ports stands at 24 bil­lion dol­lars while im­ports are dou­ble than that and the deficit is cov­ered largely by re­mit­tances which were al­most 19 bil­lion dol­lars in 2015.

Work­ers are be­ing fired in oil ex­port­ing coun­tries which will re­duce re­mit­tances and in­crease un­em­ploy­ment as well as poverty in Pak­istan un­leash­ing se­ri­ous bal­ance of pay­ments cri­sis.

Saudi Ara­bia, UAE, Kuwait, Qatar and Oman sold oil worth 500 bil­lion dol­lars in 2013 and the fig­ure is slipped now to 150 bil­lion dol­lars. Th­ese coun­tries are not ready to tol­er­ate re­mit­tances worth 100 bil­lion dol­lars in a sit­u­a­tion where only Saudi Ara­bia is fac­ing a deficit of 100 bil­lion dol­lars.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.