Oil Price Crash: Saudis Told To Embrace Austerity As Debt Defaults Loom
By Mehreen Khan
8:00PM GMT 30 Jan 2016
Saudi Arabia faces years of tough austerity as the worst oil price crash in the modern history forces the kingdom to make radical cuts to government largesse, the International Monetary Fund has warned.
The world's largest producer of crude oil will need to "transform" its economy away from oil revenues, which make up more than 80pc of the government's wealth, according to Masood Ahmed, head of the Middle East department at the IMF.
There will have to be a major transformation of the Saudi economy. It is necessary and it is going to be difficult
Masood Ahmed, IMF
The Saudi monarchy has already been forced to unveil the largest programme of government austerity in decades as oil prices have collapsed by more than 70pc in 18 months.
"This will have to be part of a multi-year adjustment process," Mr Ahmed told The Telegraph.
He urged the kingdom to reform its generous system of oil subsidies and introduce a host of new taxes, including consumption levies such as VAT.
"There will have to be a major transformation of the Saudi economy. It is necessary and it is going to be difficult, but it is a challenge which I think the authorities have clearly laid out", said Mr Ahmed.
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http://www.telegraph.co.uk/finance/economics/12130181/Oil-price-crash-Saudis-told-to-embrace-austerity-as-debt-defaults-loom.html
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