Gulf dollar pegs still effective amid coronavirus, Saudi-Russia oil price war: IMF

Dollar pegs in the Gulf have proven effective even as the region now faces the coronavirus outbreak and the crash in oil prices, the International Monetary Fund said.

Billions of dollars worth of stimulus packages were rolled out to cushion regional economies after the pandemic, but growth for the remainder of the year will depend on whether “the global economy will recover fast or not,” Jihad Azour, the IMF’s director for the Middle East and Central Asia, said in an interview with Bloomberg TV.

Dollar pegs in the Gulf have been “serving very well,” he said, “and it’s still appropriate, especially countries who have buffers that have the ability to use their reserves in order to address the shock”.

Oman, often deemed to have the weakest economy among the six-nation Gulf Cooperation Council (GCC), is at the forefront of concern.

“Oman has higher level of debt and maybe less buffers,” Azour said, “therefore, for Oman the policies have to be maybe less expensive.”