SHAFAQNA – Kuwait’s oil minister on Saturday called for economic reforms by energy-dependent Gulf states to cope with a drop in oil prices that has hurt their public finances.
Anas al-Saleh urged steps to tackle rising public spending, mainly on wages and subsidies, as well as efforts to boost the role of the private sector.
“Comprehensive economic reforms, including reforming distortions in the public finances, should be enforced,” he said at a meeting of regional finance ministers and central bank chiefs.
Saleh said the Gulf states must diversify their economies and “reduce dependence on oil”.
“Implementing these policies has become inevitable,” Saleh told the meeting, which International Monetary Fund managing director Christine Lagarde was also attending.
Forecasts indicate a healthy economic growth for the six nations of the Gulf Cooperation Council (GCC) averaging 4.5 percent in 2014-2015, Saleh said.
“But these forecasts should be treated with caution in light of fast-paced regional and international developments, particularly the drop in oil prices which has started to impact the public finances of GCC states,” the Kuwaiti minister added.
The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, which together pump 17 million barrels of crude oil per day and depend on oil for about 90 percent of public revenues.
Oil prices have slumped by about 25 percent since June because of a production glut, weaker demand and a gloomy world economic outlook.
Benefiting from high oil prices for more than a decade, the GCC states have built fiscal reserves estimated at $2.45 trillion by the International Institute of Finance.