*DUBAI – The IMF on Friday warned Saudi Arabia against boosting spending inthe wake of rising oil prices, urging the world’s top crude exporter toalso contain its wage bill.*

The International Monetary Fund said in a report that a rise in spendingwould expose the Saudi budget if there was an unexpected drop in oil prices.

The report emphasised “the importance of ensuring that spending remains ata sustainable level in different oil price environments” and the need toavoid a fiscal policy that would create undue volatility in economicactivity.

Oil prices have rebounded strongly after major producers decided to cutoutput in late 2016. In June, they decided to raise production again.

Saudi revenues jumped 67 percent in the second quarter of 2018, mainly dueto a sharp rise in oil income.

In the same period, public spending surged 34 percent, according togovernment figures.

Around half of state spending goes on the public wage bill, according tothe IMF which suggested “the workforce could be gradually reduced throughnatural attrition”.

Saudi authorities told the IMF that the civil service system is underrevision with the help of the World Bank.

Unemployment among Saudi citizens is a high 12.8 percent, rising to 31percent among women.

The country’s key challenge is to create around 500,000 jobs for itscitizens over the next five years, the IMF said while stressing the needfor more posts within the private sector.

As many as 1.4 million new jobs could be needed if female participation inthe labour market rises by just one percentage point a year until 2023, thereport said.

The IMF praised the outcome of Riyadh’s reform programme that includedcutting subsidies, raising fuel and power prices and imposing taxes.

“Higher oil prices should not slow the reform momentum,” the report said,stressing that “continued commitment to implementing wide-ranging reformswill help achieve the fiscal objectives and promote non-oil growth.”

Last month, the IMF raised Saudi Arabia’s growth forecast to 1.9 percentfor this year and the next.

The Saudi economy contracted by 0.9 percent last year, for the first timesince 2009, due to the collapse in oil prices.

Riyadh’s budget deficit is expected to continue to narrow from 9.3 percentof GDP last year to 4.6 percent in 2018 and to as low as 1.7 percent nextyear, the IMF said.

Saudi Arabia has posted a budget deficit for the past four consecutiveyears, totaling $260 billion. – APP/AFP