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End of Arab world’s ‘oil age’ fast approaching

‘Percentage of deficit in Kuwait’s budget may hit 40 pc this year’

KUWAIT CITY, July 19: ‘The Economist’ magazine says the Arab world’s ‘oil age’ is fast approaching its end as the Arab Gulf states including Kuwait are no longer able to bridge their budget deficits due to low oil prices.

The magazine added in a report that there is an opportunity to move away from the era of hydrocarbon energy. Black material (oil) prices fell in light of the comprehensive closures of countries to confront the virus.

The oil-producing countries’ resources are expected to decrease by half of what they were in 2019. The International Monetary Fund predicts a contraction of the economies of the oil-producing countries by 7.3 percent even after the virus recedes, as an oversupply of oil supplies will lead to a drop in its prices.

Arab countries are facing a situation in which they cannot bridge the budget deficit, and they are required to adapt to the new situation. Expectations indicate that the percentage of the deficit in Kuwait in its budget for this year may reach 40 percent, while Iraq faces an acute crisis as a result of low revenues and the possibility of the government resorting to reducing employee salaries in order to face the crisis, according to the report.

The Gulf Cooperation Council countries are likely to drain their $2 trillion reserves by 2034, according to the International Monetary Fund’s forecast. The magazine believes that the challenges faced by the Arab countries are terrifying , reports Al-Qabas daily. The report notes that the situation is not very different in Saudi Arabia, which was severely affected by the drop in oil prices and the corona pandemic, which forced it to impose new taxes and use part of its financial reserves to cover spending.

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