IMF Managing Director Christine Lagarde said public debt among Arab oil importing nations had increased from 64 percent to 85 percent of GDP in the decade since 2008.

Public debt has rapidly increased in many Arab countries since the 2008 global financial crisis, due to persistently high budget deficits, the International Monetary Fund warned Saturday. IMF Managing Director Christine Lagarde said;

“Unfortunately, the region has yet to fully recover from the global financial crisis and other big economic dislocations over the past decade”

“Among oil importers, (economic) growth has picked up, but it is still below pre-crisis levels,” she told the Arab Fiscal Forum in Dubai. Lagarde said public debt among Arab oil importing nations had increased from 64 percent to 85 percent of Gross Domestic Product in the decade since 2008.

Nearly half of these countries now have public debt of over 90 percent of GDP, she said.

Public debt among oil exporters including the six-nation Gulf Cooperation Council rose from 13 percent of GDP to 33 percent of GDP, accelerated by the crash in oil prices around five years ago, Lagarde said. “The oil exporters have not fully recovered from the dramatic oil price shock of 2014,” she said.

“Modest growth continues, but the outlook is highly uncertain.”

Lagarde said oil producing countries should look to renewable energy in the coming decades, in line with the Paris Agreement on climate change, which stipulates a reduction in greenhouse emissions.

The IMF last month lowered its economic growth forecasts for Saudi Arabia the world’s top crude exporter and the wider Middle East and North Africa region due to a renewed fall in oil prices, low output and geopolitical tensions.

Lagarde welcomed both spending and revenue reforms, including the introduction of a value added-tax (VAT) and excise duty by Saudi Arabia and the United Arab Emirates. But she urged more reforms, anti-corruption measures and transparency. “The economic path ahead for the region is challenging,” she added. This makes the task of fiscal policy that much harder, which in turn makes it even more important to build strong foundations to anchor fiscal policy.”

Obaid Al Tayer, UAE Minister of State for Financial Affairs, opened the main session giving a brief overview of global economic and financial conditions. He noted that the past few months have seen signs of slowing global growth, accompanied by increasing volatility in financial markets and oil prices. Trade tensions between the United States and China, the confusion over a no-deal Brexit and the tightening of fiscal and geopolitical factors in the region have contributed to global economic uncertainty.

He stressed that Arab countries are close trade partners of both China and the US and are keen not to be affected by the trade tensions between the two countries. China’s growing energy needs have contributed to closer ties between the Middle East and China, especially with the Belt and Road Initiative, which includes the creation of industrial parks, ports, new economic zones and digital economy initiatives.