Oil-exporting countries such as Saudi Arabia, Iran, Iraq, Kuwait, Qatar, UAE, Algeria and Libya who are all members of the powerful Organization of Oil-Exporting Countries, OPEC, have all seen their governments' revenues drop sharply as a result of a decline in oil prices.
Despite the increased pressure on governments, OPEC has so far refused to cut oil production to support prices in a bid to maintain its market share of the industry and to put pressure on rival U.S. shale oil producers.
The IMF predicted that oil exporting countries in the Middle East would continue to grapple with lower oil prices and that MENA (excluding Afghanistan and Pakistan) would see $360 billion decline in export revenues this year.
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The oil price decline has "increased the urgency for MENAP oil exporters to adjust their fiscal policies," the IMF said, predicting fiscal deficits to be 12.7 percent of GDP in the MENAP oil exporter countries and 7.3 percent of GDP in MENAP oil importer countries in 2015.
For Saudi Arabia, OPEC's largest oil producing member and de facto leader, the IMF predicted a fiscal deficit of 21.6 percent of GDP in 2015. As such, oil exporters needed to adjust their spending, the IMF urged.
"Because the oil price drop is likely to be large and persistent, oil exporters will need to adjust their spending and revenue policies to secure fiscal sustainability, attain intergenerational equity, and gradually rebuild space for policy manoeuvring," it said, warning that adjustment plans in most MENAP oil exporters "are currently insufficient to address the large fiscal challenge."
Adding to the gloom, the IMF warned that if regional conflicts, such as the civil wars in Syria, Iraq, Libya and Yemen prove to be "more persistent than expected, they would reduce growth in the affected countries, with adverse spillovers to the region and beyond."