Dubai: Budget deficits of GCC countries are shrinking fast on recent increase in oil prices and spending cuts implemented by the governments across the region, according to International Monetary Fund (IMF).

The IMF expects the cumulative budget shortfall of the six countries through 2021 to stand at about $240 billion, compared with a forecast of about $350 billion in its 2016 outlook.

“Most of the GCC countries have made substantial efforts in fiscal adjustments. The improvement in oil prices are also helping the fiscal balances,” said Jihad Azour, Director of Middle East and Central Asia Department, IMF.

After two years of deficits, the IMF expects GCC countries to record a current account surplus of $26 billion in 2017 compared to a deficit of 28 billion in 2016.

For 2017 the IMF has projected lower economic growth for GCC at 0.9 per cent and 2.5 per cent for 2018. GDP growth in the UAE is forecast to slow down to 1.5 per cent in 2017 recover sharply to 4.4 per cent in 2018.

Dubai’s GDP is likely accelerate this year at a faster pace than GCC average, supported by a pickup in global trade and local spending. GDP will grow as fast as 4 per cent from 2.7 per cent in 2016, according IMF’s Azour.

The IMF official expects pick up in local project awards, linked to infrastructure development and Expo 2020 related projects to boost the pace of growth of the local economy from this year.

“The IMF’s Article IV Consultations with the UAE authorities are under way and there will be more clarity on growth outlook and government debts when these are finalised,” said Azour.

The IMF’s growth forecast for the region comprising the Middle East, North Africa, Afghanistan and Pakistan (MENAP), the IMF has cut the real GDP forecast to 2.6 per cent, down from the 3.9 per cent in 2016.

Saudi Arabia’s real GDP is projected grow at 0.4 per cent against 1.4 per cent growth last year and for 2018, the IMF projects GDP growth at 1.3 per cent. While GDP growth in Qatar is projected to exceed 3.4 per cent in 2017, it is expected to moderate to 2.8 per cent in 2018. In Kuwait, the real GDP growth is projected to slip into negative territory with a minus 0.2 per cent this year from 2.5 per cent growth last year.