The International Monetary Fund (IMF) warned Wednesday that Saudi Arabia may go bankrupt by 2020.
The IMF's Middle East economic outlook report revealed that Saudi Arabia may run out of financial assets within five years if the kingdom maintains its current financial policies.
"Under current policies, countries would run out of buffers in less than five years because of large fiscal deficits," the report said, according to Gulf Times.
"The budget deficit in Saudi Arabia does go down substantially as a share of GDP over the next five years but it still remains high over this period, all the more reason to identify ways in which it can be brought down further to more a manageable level," said Masood Ahmed, IMG's regional director for Middle East and Central Asia, according to Sputnilk.
Saudi finance minister Ibrahim Alassaf hinted last month that the government would take bold steps like cutting expenses and scrapping some projects in order to fill fiscal deficits gap, reported Reuters.
The report also pointed out that the economic growth in the entire oil-exporting Gulf Cooperation Council region will further slow down due to contact fall in oil prices.
"The pace of fiscal consolidation poses a risk to GCC growth prospects, if the chosen mix of adjustment policies leads to a larger-than-expected decline in domestic demand. Further, risks relate to potential structural reform fatigue as the effects of the fiscal consolidation filter through to the wider economy," he said, according to Gulf News.
Ahmed also said that the Washington-based lender is expecting hard political decisions and reforms from the Gulf States in order to manage the expected inflated deficits in the coming years.
