Energy-addicted Gulf states must undertake much deeper reforms or risk seeing their wealth drain away in 15 years as global demand for oil slides, the International Monetary Fund warned.
“At the current fiscal stance, the region’s financial wealth could be depleted by 2034,” the IMF said in a study on “the future of oil and fiscal sustainability” in the region.
The Gulf Cooperation Council, made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates, accounts for a fifth of the world’s crude supplies and oil income makes up 70% to 90% of public revenues.
GCC government debt rose from $100 billion in 2014 to nearly $400 billion in 2018. As a result, net financial wealth is on track to turn negative by 2034 or even faster, the report said.
The global energy market is undergoing change as new technologies are increasing supply, while concerns over climate change see the world moving towards renewable sources.