IMF urges action to face ‘big drop’ in Mideast growth

DUBAI: The International Monetary Fund called Tuesday for urgent action from Middle East governments as the coronavirus pandemic threatens a persistent slump in oil revenues and a "big drop" in growth.

The IMF said a dozen Middle Eastern and North African countries had already approached it for financial support. It urged governments across the region to swiftly draw up rescue packages to head off a protracted recession.

"The region is likely to see a big drop in growth this year," the IMF's regional director for the Middle East and Central Asia, Jihad Azour, said in a report. The fund had already substantially cut its growth projections for the region over low oil prices, civil unrest and US sanctions against Iran.

The coronavirus pandemic has triggered a 50 percent fall in oil prices that has slashed government revenues across the region. "The coronavirus pandemic has become the largest near-term challenge to the region," Azour said.

Moody´s Investors Service estimated on Tuesday that oil income for crude-exporting nations will decline this year by between four and 10 percent of gross domestic product. Kuwait and Iraq will see their oil revenues dive by more than 10 percent of GDP, while the decline for Saudi Arabia, Oman, Qatar and Bahrain will be between four and eight percent, it said in a report. It did not provide estimates for the UAE.

Moody´s said it based its estimates on the assumption that Brent oil prices will average between $40 and $45 a barrel in 2020, although prices currently hover at a round $28 a barrel. Earlier this week, Standard and Poor´s ratings agency lowered its projection for average oil price this year to $30 a barrel, which would signal a greater decline.