Budget deficits of the six Gulf Cooperation Council countries are expected to drop sharply this year, supported by higher oil prices, fiscal consolidation and a rebound in economic output as coronavirus measures are eased, S&P Global Ratings said.<\/p>\n
The aggregate deficits of the central governments of the GCC are expected at about $80 billion this year from $143 billion in 2020, S&P said in a report on Wednesday.<\/p>\n
“Nevertheless, still-high GCC central government deficits will result in continued balance sheet deterioration in most cases,” S&P said. But it noted that, with the exception of Kuwait and Bahrain, the countries’ budgetary performance was stronger than in 2016 – the prior oil price crash.<\/p>\n
The Gulf was hammered by the double shock of a historic crash in oil prices last year as well as the economic impact of the coronavirus pandemic and related health safety measures.<\/p>\n
Higher oil prices, while supportive for GCC sovereign ratings, have in the past derailed consolidation reforms and therefore led to higher spending or delays in planned fiscal reforms, S&P said.<\/p>\n
“Many Gulf states have shown spending restraint in response to the double external shocks of 2020 … (and some) have also made inroads to diversifying their government revenue streams away from hydrocarbons,” S&P said.<\/p>\n
Saudi Arabia tripled a value-added tax last year to boost state finances hurt by the coronavirus crisis and lower oil revenues, while Oman introduced VAT for the first time last month.<\/p>\n
“We expect fiscal deficits will reduce over 2021-2022 and widen again in 2023-2024 given our oil price assumptions, as well as the gradual tapering of oil production cuts in line with the May 2021 OPEC+ agreement,” the ratings agency said.<\/p>\n
It assumed a Brent crude price of $60 per barrel for the rest of 2021, the same in 2022 and $55 per barrel from 2023.<\/p>\n
S&P expected GCC government debt issuance to average about $50 billion per year from 2021 to 2024, compared to $70 billion last year and close to $100 billion in 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"
Budget deficits of the six Gulf Cooperation Council countries are expected to drop sharply this year, supported by higher oil prices, fiscal consolidation and a rebound in economic output as coronavirus measures are eased, S&P Global Ratings said. The aggregate deficits of the central governments of the GCC are expected at about $80 billion this year from $143 billion in 2020, S&P said in a report on Wednesday. “Nevertheless, still-high GCC central government deficits will result in continued balance sheet deterioration in most cases,” S&P said. But it noted that, with the exception of Kuwait and Bahrain, the countries’ budgetary […]<\/p>\n","protected":false},"author":39,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[133],"tags":[],"class_list":["post-417188","post","type-post","status-publish","format-standard","hentry","category-oil-gas"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/417188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/39"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=417188"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/417188\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=417188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=417188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=417188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}