IMF tells Gulf states to speed up switch from oil

DUBAI: The IMF on Tuesday advised from oil after projecting the worst growth for the region since the

Oil exporters in the Middle Cooperation Council, have been hit hard by the collapse in crude prices which provided a major part

members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates undertook cut public spending and boost non-oil revenues.

As a result, economic growth has slowed considerably as the oil exporters posted huge budget deficits.

In its Regional Economic Outlook, the International Monetary economic growth at just 0.5 percent this year, the worst since the 0.3 percent growth in 2009 fol

economies to accelerate their

Director of the Middle East and Central Asia and International Monetary Fund, Jihad Azour, gestures during an interview with AFP at Dubai’s International Financial Center on October 30 2017. The IMF advised the energyrich Gulf states to “accelerate diversification” outside oil income after projecting the worst economic growth for the group since the global financial crisis. diversification outside oil and to promote a greater role for the private sector to lead growth and create additional jobs,” said Jihad Azour, director of the Middle East and Central Asia at IMF.

“Preparing their economies to the post-oil era is something that is becoming a priority for authorities

“We are seeing governments - egies and introducing a certain number of reforms to allow the economy to be prepared for the post- oil era. And those are important reforms,” he said.

Non- oil sector on rise

- jections are mainly driven by the oil producers deal to cut output to bolster low crude prices which exported less oil.

The IMF report also projected that the economies of oil export Africa—also including Iran, Iraq, Algeria, Libya and Yemen—would grow 1.7 percent, down from 5.6 percent the previous year.

contrary, were expected to expand 4.3 percent this year, up from 3.6 percent in 2016, the report added.

Azour said the IMF was pro Saudi Arabia, the largest econo non-oil sector was growing faster than expected.

This was an indication “that the Saudi economy is bottoming up and it shows that the gradual - justment now is going to allow the Saudi economy to grow faster,” Azour said.

He estimated that Saudi Arabia - ance by between 2020 and 2022.

Azour said the introduction of the five percent value-added tax (VAT) was one of the reform measures that would allow the revenues away from oil.

“Its low rate will have a limited said Azour, adding that VAT is estimated to generate between 1.5 and two percent of gross domestic product annually.

So far, Saudi Arabia and UAE have said they would apply the tax at the start of next year while the remaining four nations have the whole of 2018 to implement it.