"With revenues down, fiscal deficits areonly slowly declining, despite significant reforms on both the spending andrevenue sides, including the introduction of VAT and excise taxes,"Christine Lagarde, told a conference in Dubai, CNBC reported.

"This has led to a sharp increase inpublic debt, from 13% of GDP in 2013 to 33% in 2018."

Lagarde said uncertainty in the growth outlookfor Oil exporters also reflected moves by countries to shift rapidly towardrenewable energy over the next few decades, in line with the Paris climatechange pact.

She said there was scope to improve fiscalframeworks in the Middle East with some of the weaknesses emanating from"short-termism and insufficient credibility."

Lagarde said governments in the region might betempted to favor white elephant projects instead of investment in people andproductive potential.

She said across the region, it is common forsovereign wealth funds to directly finance projects, bypassing the normalbudget process, while state-owned enterprises in some countries had high levelsof borrowing, outside the budget.

She said Oil exporters could follow the exampleof other resource-rich countries such as Chile and Norway in using fiscal rulesto protect priorities, such as social spending, from commodity pricevolatility.

Among Oil importers in the Middle East region,growth had picked up, but it was still below the level before the globalfinancial crisis, she said.

Speaking about the global economy, Lagarde saidthe IMF was not seeing a global recession on the horizon, but risks were risingfor global growth due to trade tensions and tightening financial conditions.

The IMF's revised forecast sees the globaleconomy growing by 3.5% this year, 0.2%age points below what it expected in October.

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