On Thursday, the International Monetary Fund (IMF) said that the Gulf Arab states could see their financial wealth deplete in next 15 years due to lower hydrocarbon revenues if they don't step up fiscal reforms.
The IMF estimates the net financial wealth of the six-nation Gulf Cooperation Council (GCC) at $2 trillion. These countries account for one-fifth of the global oil supply but their economies have been falling since the drop in oil prices in 2014.
Lower oil prices have put pressure on these governments to generate non-oil income and at their current fiscal stance, IMF said in a report, that "the region's existing financial wealth could be depleted in the next 15 years."
The international lender, in its report prepared by a team of its Middle East and Central Asia specialists, said that global oil demand could peak by around 2040 or sooner on a stronger regulatory push for environmental protection and energy efficiency.
"The world's demand for oil is expected to grow more slowly and eventually begin to decline in the next two decades," it said.
For decades, these countries in the Middle East have used their oil wealth to provide millions of citizens with government jobs, and rewarded political acquiescence and educational attainment with employment for life. This has lead to low productivity and an entitlement culture, which will only raise costs as population grows.
Hefty spending on subsidies, social services and generous pensions have also hurt their budgets.
While economic reforms have been made in some GCC countries, it needs to accelerate, the IMF said. Regional governments may need to cut spending further, save more and introduce broad-based taxation to make ends meet.