IMF praises Saudi Arabia for fiscal prudence

The International Monetary Fund (IMF) chief Christine Lagarde on Saturday commended Saudi Arabia and the UAE for setting up "macro-fiscal units", which is a useful first step in strengthening the fiscal framework.

"There is scope for further improvement. Perhaps the oil exporters could follow the example of other resource-rich countries such as Chile and Norway in using fiscal rules to protect key priorities such as social spending from commodity price volatility," she said in a speech at the Fourth Annual Arab Fiscal Forum in Dubai.

She, however, emphasized that corruption, poor governance and a lack of transparency were the key challenges facing Middle East economies, stating the IMF was planning talks with regional policymakers to implement new frameworks to strengthen governance and tackle corruption.

“Among oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly — from 64 percent of GDP in 2008 to 85 percent of GDP a decade later. Public debt now exceeds 90 percent of GDP in nearly half of these countries.

“The oil exporters have not fully recovered from the dramatic oil price shock of 2014. Modest growth continues, but the outlook is highly uncertain," Lagarde noted.