Accentuating the positive
When we commented last week on the International Monetary Fund's new report, Learning to Live with Cheaper Oil, we naturally focused – as the report did – on weaknesses in our economies and the need for "new sources of growth and fiscal revenue."
We did mention in passing some positive steps cited by the IMF, but our focus was on areas crying out for improvement, with emphasis on developing "the habit of self-examination."
Looking back on that editorial, and doing some self-examination of our own, we conclude that we may not have done justice to those positive steps. We may have put too much emphasis on the bad news and not enough on the good.
"The good news," according to the IMF report, "is that policymakers have started responding to this new reality, and substantial progress has already been made, especially with respect to fiscal consolidation." In some Gulf nations, "ambitious fiscal consolidation measures are being implemented this year" and "a number of countries appear to be planning sizable cuts in public investment."
Member nations of the Gulf Cooperation Council (GCC) "have pursued substantial energy price reforms. Fuel, water, and electricity charges have been raised significantly from very low levels in most of these countries, including Saudi Arabia, and some countries have indicated that further price increases will be undertaken over time."
Most of the oil exporters in our region "enter this challenging period from a position of strength, having built up large financial buffers during the years of high oil prices. These resources can be drawn down in the coming years to smooth out – but not avoid – the adjustment to lower oil revenues."
To adjust to those lower oil revenues, "several policymakers have announced the introduction of a GCC-wide value added tax (VAT), as well as other fees, charges, and excises."
That's the upside. We've made genuine progress in the right direction. We've got more steps to take and some growing pains to endure, but we'll emerge better and stronger in the end. Then, we can start looking for other opportunities for self-improvement.