The decline in oil prices has increased the importance of reforms to switch the focus of growth from the public sector to the private sector in Saudi Arabia, said Christine Lagarde, managing director of the IMF.

Lagarde made these remarks at the conclusion of her visit to Saudi Arabia, reported Trade Arabia.

She added: “It is important that the government accelerate reforms that increase the employment of nationals in the private sector and diversify the economy away from oil. Continued reforms to expand employment opportunities for women would also bring more well-educated and motivated workers into the workforce and strengthen growth prospects.”

“It has been a great pleasure to visit Riyadh, Saudi Arabia, where I had the privilege of meeting the Custodian of the Two Holy Mosques King Salman Bin Abdulaziz Al Saud and His Royal Highness Deputy Crown Prince Mohammed bin Salman. We discussed the global and regional economic outlook and the current policy challenges facing Saudi Arabia,” she said.

Lagarde also held discussions with Minister of Finance Ibrahim Al-Assaf; Saudi Arabian Monetary Agency (Sama) governor Fahad Almubarak, and Capital Markets Authority (CMA) chairman Mohammed Al-Jadaan.

“Prudent fiscal management has helped build-up substantial policy buffers over the past decade, but reforms that would put the large fiscal deficit on a firm downward path are needed. The banking sector is in a strong position to weather lower oil prices and weaker growth. Sama is also continuing to strengthen its regulation and supervision of the financial sector. Nevertheless, the banking system will need to continue to be carefully monitored in the period ahead,” she added.

She also reiterated the IMF’s readiness to continue to help the authorities through a policy dialogue tailored to the needs and circumstances of the Saudi Arabian economy.

In a related development, CNBC said that some Saudi officials downplayed these dire warnings over oil prices. Saudi’s vice oil minister said long-term oil market fundamentals remain robust but prolonged low prices could threaten security of supply and pave the way for a price spike.

“Rather than being a commodity in decline, as some would like to portray, supply and demand patterns indicate that the long-term fundamentals of the oil complex remain robust,” said Prince Abdulaziz bin Salman  ,” in a speech at an Asian energy conference in the Qatari capital Doha.