ABU DHABI (Reuters) – The International Monetary Fund is confident that Gulf Cooperation Council economies can make the large fiscal adjustments they need to cope with a period of low oil prices, IMF Managing Director Christine Lagarde said on Monday.
She said oil exporters would have to reduce state spending and increase government revenues, but that they had shown the ability to adjust in the past and could do so again.
“These economies need to strengthen their fiscal frameworks and re-engineer their tax systems by reducing their heavy reliance on oil revenues and by boosting non-hydrocarbon sources of revenues,” Lagarde told a conference of Arab economic officials.
She added that introducing a value-added tax, even at a low single-digit rate, could raise revenues equivalent to as much as 2 percent of gross domestic product.
(Reporting by Stanley Carvalho; Writing by Andrew Torchia)
