Oil exporters have not fully recovered from the dramatic oil price shock of 2014, the head of the IMF said on Saturday, and she cautioned against spending money on “white elephant projects”.

“With revenues down, fiscal deficits are only slowly declining, despite significant reforms on both the spending and revenue sides, including the introduction of VAT and excise taxes,” Christine Lagarde, the managing director of the IMF, told a conference in Dubai.

“This has led to a sharp increase in public debt, from 13 per cent of GDP in 2013 to 33 per cent in 2018,” she added.

Lagarde said the uncertainty in the growth outlook for oil exporters also reflected moves by countries to shift rapidly toward renewable energy over the next few decades, in line with the Paris climate change pact.

Lagarde said governments in the region might be tempted to favour white elephant projects instead of investment in people and productive potential.

Saudi Arabia, West Asia’s biggest economy, has announced plans to go ahead with three major projects, including NEOM, a $500-billion economic zone announced by Crown Prince Mohammed bin Salman. The projects are backed by the country’s sovereign wealth fund, the Public Investment Fund.

Lagarde said across the region, it was common for sovereign wealth funds to directly finance projects, bypassing the normal budget process, while state-owned entities had high levels of borrowing, outside the budget.