New York (HRNW) The Arab monarchies of the Persian Gulf face a budget reckoning and risk squandering their $2 trillion in financial wealth within 15 years as oil demand nears peak levels, according to the International Monetary Fund.
Global oil demand may start falling sooner than expected, putting a strain on the finances of the six-member Gulf Cooperation Council, which accounts for a fifth of the world’s crude production, the IMF said in a report Thursday.
Without decisive economic reforms, the richest Middle Eastern states could exhaust their net financial wealth by 2034 as the region becomes a net debtor, the fund projects. Within another decade, their total non-oil wealth would also be exhausted, the IMF said in the report prepared by a team of its Middle East and Central Asia specialists as well as the research department.
“Countries in the region need to think long-term and strategically because the oil market is changing structurally both from the demand and the supply side,” Jihad Azour, director of the IMF’s Middle East and Central Asia Department, said in an interview.