Public debt rapidly increases in Arab countries

The International Monetary Fund (IMF) has warned of a “challenging” economic path that lies ahead of the Arab countries since their public debt has rapidly increased due to their high budget deficits.

IMF Managing Director Christine Lagarde said Saturday public debt among Arab oil exporter countries had increased from 64 percent to 85 percent of Gross Domestic Product (GDP) since 2008.


"Unfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade," she told the Arab Fiscal Forum in Dubai.

"Among oil importers, (economic) growth has picked up, but it is still below pre-crisis levels," she added.

Public debt among Arab oil exporters rose from 13 percent of GDP to 33 percent of GDP, accelerated by the crash in oil prices around five years ago, she said.

Lagarde said the region’s oil exporters “have not fully recovered from the dramatic oil price shock of 2014.”

"Modest growth continues, but the outlook is highly uncertain," she said. “The bottom line: the economic path for the region is challenging.”

The IMF last month lowered its economic growth forecasts for the world's top crude exporter, Saudi Arabia, citing a renewed fall in oil prices, low output and geopolitical tensions as the main reasons.

The IMF warning came as research group IHS Markit company said last year that the Persian Gulf states were expected to increase their military speeding to some $100 billion by 2019.

According to the report published in September, the Arab states of the Persian Gulf Cooperation Council (GCC) —Saudi Arabia, UAE, Kuwait, Qatar, Bahrain and Oman —will increase the military spending to reach record highs in 2019.

Saudi Arabia is currently the third largest military spender in the world, according to the data provided by the Stockholm International Peace Research Institute last year.