IMF warns on oil price shock for Mena
Dubai, October 10, 2013
The International Monetary Fund has warned that a sustained drop in oil prices could leave many Middle Eastern and North African exporters in the red because of surging spending, a report said.
The warning came in the IMF's new World Economic Outlook report, which expected growth in Mena oil-exporting economies to drop to 1.9 percent this year from 5.4 percent in 2012 before gathering pace next year to 3.8 percent, the AFP report said.
"A sustained decline in oil prices would leave many oil exporters in the (MENA) region with fiscal deficits," the report said.
The IMF said the oil price needed for budgetary break-even is now higher than the expected price for oil in 2014.
"Over the past several years, increased spending has raised fiscal break-even oil prices... faster than actual oil prices have risen," it said.
"As a result, a number of economies (including) Algeria, Bahrain, Iran, Iraq, Libya, Yemen, have fiscal break-even prices above the projected oil price for 2014," it added.
Some Gulf countries have substantial fiscal buffers, but other regional exporters should have adopt a fiscal policy focused on "building buffers against oil prices shocks by finding non-oil sources of revenue and containing hard-to-reverse current expenditures."
The report also suggested that several factors could put pressure on oil exporters in the region.