According to the report, the region will lose an estimated $360 billion this year due to low oil prices.
Countries which rely on oil for their budget incomes are now seeing their budget surpluses turning into massive deficits as oil prices have tumbled by more than 50 percent, to $45 per barrel versus over $100 last year.
"The oil price decline is expected to have a large, permanent component. Therefore, oil exporters will need to adjust their spending and revenue policies to ensure fiscal sustainability and rebuild space for policy maneuvering," the report read.
In order to balance its budget, Saudi Arabia needs to sell oil at around $104 per barrel, according to the IMF.
The decline in oil prices has forced Riyadh to preserve cash. Earlier this year, the country raised $4 billion by selling bonds. Additionally, over the past six months they have withdrawn up to $70 billion from funds managed by overseas financial institutions.
According to the IMF survey, Saudi Arabia will suffer a negative 21.6 percent overall fiscal balance in 2015 and a 19.4 percent negative balance in 2016, against only —3.4 percent in 2014.
More so, Saudi Arabia’s current account deficit is expected to rise to 20 percent of GDP this year.
"In an environment with regional insecurity and domestic instability, to chip away at that social contract is a bit of a political gamble," Henry Smith, a Dubai-based associate director with consultancy Control Risks, told CNN.
Meanwhile, he added that big government projects of less economic significance are likely to be reduced.
