However, the fund is recommending a host of reforms, including a boost to public finance management, to improve economic growth in the Middle Eastern country.

Growth in the UAE is expected to slow to 3.4% this year, down from 4.8% last year, the IMF said following its Article IV Mission. However, growth is then expected to increase to 3.6% in 2016, reaching 4.6% in 2020

“Lower oil prices have increased macro-financial stability risks. Prudent economic policies, progress in economic diversification, and the safe-haven status of the UAE have helped build large fiscal and external buffers and strengthen the resilience of the economy,” the IMF said.

It added that reforms should also focus on gradual fiscal consolidation, which would require spending cuts, but warned that the quality of cuts was critical to avoid damaging the country’s competitiveness and long-term growth prospects.

Additionally, the public sector wage bill should be controlled, while energy subsidies should be reduced and non-hydrocarbons taxed to raise more revenue.

“Fiscal policy implementation requires further strengthening annual budget processes, including strong public finance management systems, and integrating and operationalising medium-term budget frameworks,” said the IMF in a statement.

“Close oversight and continued strengthening of debt management frameworks are crucial.”

Along with fiscal adjustments, the government has also recommended structural reforms that would diversify the economy and accelerate private sector-led job creation for nationals.

The fund said these reforms should include a further opening up to foreign direct investment, easier access to finance for start-up companies and SMEs and incentives for entrepreneurship and job creation.