Gulf states to gain $1.3 trillion in additional oil revenue by 2026: IMF

The gains, due to high oil prices, are expected to provide 'firepower' to the region's sovereign wealth funds (SWFs), one of the largest in the world

Countries in the Middle East are expected to gain up to $1.3 trillion in the next four years from additional oil revenues, according to the International Monetary Fund (IMF). The gains, due to high oil prices, will provide 'firepower' to the region's sovereign wealth funds (SWFs), according to Financial Times (FT).

The region's oil and gas exporters, especially the Gulf countries, "will see additional cumulative oil revenues of $1.3 trillion through 2026," IMF director for the Middle East and North Africa Jihad Azour was quoted as saying by FT.

Most of the oil and gas exporters in the region have large SWFs and have been using them to use the windfall in further investments. Some of these are Saudi Arabia's Public Investment Fund, the Qatar Investment Authority, Abu Dhabi Investment Authority, Mubadala, and ADQ.

Saudi's PIF is chaired by crown prince Mohammed bin Salman. It has invested over $620 billion in total. Out of these, $7.5 billion alone were invested in US stocks during the second quarter, when the share prices were relatively low. PIF bought stocks of Amazon. PayPal, and BlackRock, among others, according to the report.

Azour said that the Gulf nations must use the gains to invest in technology. "It's an important moment for them to...accelerate in sectors like technology [domestically] as this is something that will allow them to increase productivity," he told FT.

Usually, the Gulf states' economies have depended on global oil prices. This has left them vulnerable to possible downturns when the prices recede. It puts additional pressure on the governments.

However, Saudi Arabia has been investing through PIF. It has been tasked with developing several megaprojects to modernise the kingdom.

Due to the oil price boom, Saudi Arabia is set to record a budget surplus of 5.5 per cent of GDP in 2022-23. This will be its first surplus since 2013. This will also take its GDP growth rate to 7.6 per cent, its fastest pace in over ten years, FT stated.

For the Gulf Cooperation Council, the growth rate has been estimated at 6.4 per cent in 2022 by the IMF. In 2021, its growth rate was 2.7 per cent.