The International Monetary Fund feels the pace of Saudi Arabia's austerity drive is broadly appropriate and there is little room for Riyadh to ease up on the spending cuts that have slowed economic growth sharply, a senior IMF official said. Ahmed said the IMF expected Saudi Arabia to run a fiscal deficit of 13.0 percent of GDP this year, compared to an estimated 15.9 percent last year. Ahmed said the delays were "not a preferred method" of cutting the budget deficit but it was hard to impose austerity without pain. The IMF expects Saudi economic growth to bottom out at 1.2 percent this year, rebounding to 2.0 percent in 2017. "An adverse feedback loop between budget spending cuts and tightening credit conditions could reduce the private sector’s ability to pick up the slack created by the shrinking public sector," it said.

Source: Egypt Independent October 19, 2016 05:03 UTC