Riyadh–Christine Lagarde, managing director of the International Monetary Fund (IMF), said that Saudi Arabia has started a great change in economic policy to respond to low oil prices.

She added that the Saudis have started a fiscal adjustment, with expenditures coming down and revenues increasing.

“These efforts should continue over the medium-term including through further increases in energy prices which are still low by international standards, further revenue-raising measures including from the planned introduction of excises and the VAT at the GCC level, and further spending restraint,” she said during a joint news conference with Saudi Finance Minister Ibrahim Al-Assaf in Riyadh on Wednesday.

Lagarde also stressed that the so-called “Vision 2030” and “National Transformation Program (NTP)” strategies provide for “ambitious” reforms to reduce the country’s dependency on the commodity.

The IMF managing director said that GCC countries should implement further reforms to face the decline in oil prices.

“The reforms that the GCC countries have been implementing over the past year in response to the decline in oil prices are impressive,” Lagarde said, stressing these countries need to continue enforcing fiscal adjustment measures in the medium term.

“Where possible, countries should phase in deficit-reduction measures gradually, while strengthening their medium-term fiscal frameworks and fiscal transparency to support the adjustment,” she said.

“Policies to support growth and employment will also need to continue,” she added.

For his part, Al-Assaf said that the IMF forecasts for GDP growth of 1.2 percent this year and 2.0 percent in 2017 were “reasonable”, noting that he expects economic growth to be “2.0 percent or less” in 2017.

He said he hoped plans to impose region-wide VAT and excise taxes would be finalized at a meeting of GCC finance ministers on Thursday.