Oil exporters to raise reserves

Oil exporters in the Middle East and North Africa region are expected
to increase their international reserve positions by over 100
billion dollars in 2010 as oil prices rebound, the IMF said on
Sunday. The rebuilding of their international reserve positions
would help governments of the region maintain public spending, which
has helped mitigate the impact of the global financial turmoil on
their economies, the International Monetary Fund said in report
released in Dubai. 'With higher oil prices and the anticipated re-
emergence of global demand, oil revenues are expected to increase,
allowing oil exporters to rebuild their international reserve
positions by over 100 billion dollars in 2010,' the Middle East and
Central Asia Regional Economic Outlook said. Oil exporters—Algeria,
Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Sudan,
United Arab Emirates and Yemen—have suffered as oil prices dropped to
near 30 dollars per barrel around the turn of the year from a
life-time high of 147 dollars per barrel in July 2008. As a result,
the current account surplus of these countries dropped by nearly 350
billion dollars. Since then, the price of oil has rebounded to
around 70 dollars per barrel. 'The use of reserve buffers for
countercyclical spending by oil exporters mitigated the impact on
their own economies and generated positive spillovers for their
neighbours,' IMF Middle East and Central Asia department director
Masood Ahmed said in a press release. The IMF projected that the
economies of all countries of the Middle East and North Africa in
addition to Afghanistan and Pakistan are expected to grow 4.0 per
cent in 2010. The fund also said that strengthening financial
regulation and supervision is crucial to cushioning the financial
system against future shocks. Gulf Arab economic growth is expected
to slow to 0.7 per cent in 2009 from 6.4 per cent in 2008 but rising
to 5.2 per cent next year, the IMF said. The IMF report said that
the impact of the crisis in the region is most visible in the oil
sector, where output is projected to contract by 3.5 per cent in
2009. 'The MENAP (Middle East, North Africa, Afghanistan and
Pakistan) oil exporters were directly affected by the global
financial crisis through a sharp drop in oil prices, a contraction
in the global economy, and a sudden drying up of capital inflows,' the
report said. Oil importers' economic growth will slow to 3.6 per
cent this year from 5 per cent in the previous year but the report
said that they will be straddled by high debt levels that would limit
the space for fiscal stimulus. The IMF recommended that these oil
importers boost private sector activity, create jobs and strengthen
competitiveness.