And in the process creating a government savings glut? The growing deposits of the government of the oil producers at their own central banks are absolutely stunning.
The Saudis will add over $100b to their reserves this way this year. That is enough to write a check of $20,000 to each of Saudi Arabia’s roughly 5 million households.
Incidentally, I also should give credit where credit is due. In the past, I have criticized the IMF for its silence on the GCC countries’ dollar pegs. The most recent regional outlook isn’t guilty on that front. It clearly notes the contribution dollar pegs and conservative fiscal policy have made to the region’s large current account surplus, and makes the case that real exchange rate adjustment is needed.