International community should unite to counter threat of low oil prices: PEW

Lahore: The Pakistan Economy Watch on Sunday said international community should unite to counter threat of low oil prices as it will bankrupt oil importing developing countries before the oil-rich nations paving way for another international crisis.

Pakistan should reduce expenditure, enhance exports and focus on value-addition as well as innovation otherwise it will not be able to thwart default even with the help of IMF, it said.

According to experts, oil exporting countries are running large budget deficits while Saudi Arabia having over 700 billion dollars in reserves can default by 2020 if the prices of oil remained subdued.

Realising the threat all the oil exporting countries are cutting expenditure and subsidies, enhancing taxes, downsizing state-run and private organisations and planning to slap tax on remittances which is a threat for countries like Pakistan dependent on worker remittances.

Dr. Murtaza Mughal said that Pakistan exports stands at 24 billion dollars while imports are double than that and the deficit is covered largely by remittances which were almost 19 billion dollars in 2015.

Workers are being fired in oil exporting countries which will reduce remittances and increase unemployment as well as poverty in Pakistan unleashing serious balance of payments crisis.

Saudi Arabia, UAE, Kuwait, Qatar and Oman sold oil worth 500 billion dollars in 2013 and the figure is slipped now to 150 billion dollars. These countries are not ready to tolerate remittances worth 100 billion dollars in a situation where only Saudi Arabia is facing a deficit of 100 billion dollars.

Pakistan receives 30 percent of its remittances from KSA which is in deep trouble therefore policymakers should try to find out a solution before it is too late, said Dr. Mughal.