The International Monetary Fund forecasted that the Kingdom of Saudi Arabia, Bahrain and Oman would post a combined deficit in the current account balance of $16.7 billion.
This represents 2.2 per cent of the total gross domestic product of these countries, reports Bahrain-based Al-Wasat News.
The IMF’s forecasts show that the decline in oil prices and the environment of low prices that are expected to continue in the medium term will transform current account surpluses in most of the GCC and the MENA regions to a deficit in 2015.
Meanwhile, Saudi Arabia alone recorded a deficit in the current account balance of $404bn over the period from 2012 to 2014.
However, it is expected to return to record values of current account surpluses gradually on the medium term, as a result of the gradual increase in oil prices and the implementation of fiscal consolidation plans.
In addition, the IMF expects that the return of the United States’ monetary policy would lead to stresses in the fiscal and monetary situations in the MENA region, especially in the GCC, despite the fact that the transmission effects will be slow and partial.
In its latest regional economic outlook, the IMF says that growth is expected to strengthen this year in line with an improved global outlook. However, weak confidence and, in some cases, large public deficits will continue to weigh on the region’s economic prospects.
The report points out that, in light of the massive decline in oil prices, the oil wealth of the oil-exporting Gulf countries with strong fiscal positions is expected to gradually move to the oil-importing countries.
GCC states have already started taking many measures to tackle this: Saudi Arabia announced in February 2015 that it will implement a wide range of reform measures at the level of public finance policy valued at about 4 per cent of the GDP.
In Bahrain, the government increased the prices of natural gas used for industrial purposes (+11 per cent) and the insurance fees of medical staff (paid by employers) by the beginning of 2015.
The rest of the GCC states announced the curb of current capital expenditures on several levels.