The International Monetary Fund (IMF) has warned that the Persian Gulf Kingdom of Qatar will face budget deficit from 2016 onward as global oil prices continue a downward trend.

The IMF released the ‘Qatar country report’ on Thursday, highlighting that “lower oil prices will lead to a substantial deterioration of the fiscal and external balances” of the oil-rich kingdom, which sees more than 90 percent of its revenue coming from energy sector.

“In sharp contrast to previous years, the budget will be in deficit from 2016 onward and the current account surplus will largely be eliminated,” the report said.

Meanwhile, the report suggested that Qatar needs to diversify its economy to curb the impact of low oil prices, adding that an investment program is also essential for the economic development.

However, the report also stated that the country’s economic growth is expected to increase to about seven percent in 2015, adding that only “the short-term growth outlook is positive.”

On Thursday, benchmark US crude, West Texas Intermediate (WTI) for May delivery, closed at USD 49.14 per barrel on the New York Mercantile Exchange.

Oil prices have plunged about 50 percent since June 2014, over increased supplies by certain countries such as Saudi Arabia, the largest producer at the Organization of Petroleum Exporting Countries (OPEC), and a lackluster global economic growth.

OPEC, which pumps out about 40 percent of the world’s oil, has so far refrained from cutting its production to balance the market due to opposition from Saudi Arabia.

HJM/MKA/HMV