Gulf bud­get deficit to peak this year

The Myanmar Times - - International Business -

GULF Arab oil ex­porters are ex­pected to see their bud­get deficits peak this year ow­ing to the plunge in en­ergy rev­enues.

The com­bined deficit of the six Gulf Co­op­er­a­tion Coun­cil (GCC) states is fore­cast to hit US$153 bil­lion in 2016, up from $119 bil­lion last year, Kuwait’s in­vest­ment firm KAMCO Re­search said.

OPEC king­pin Saudi Ara­bia is ex­pected to ac­count for 55 per­cent, or more than $84 bil­lion, of the ex­pected short­fall.

Last year, the world’s top crude ex­porter posted a to­tally un­ex­pected record deficit of $98 bil­lion.

The GCC deficit will start eas­ing from next year but the six na­tions are fore­cast to post an av­er­age an­nual short­fall of $100 bil­lion un­til 2021, the re­port said.

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Ara­bia and United Arab Emi­rates, which to­gether pump more than 18 mil­lion bar­rels per day of crude oil.

GCC to­tal rev­enues, mainly from hy­dro­car­bons, dropped from a peak of $735 bil­lion in 2013 to just $443 bil­lion in 2015, the low­est in five years, KAMCO said.

They are fore­cast to slide fur­ther to $365 bil­lion this year.

Oil prices have plunged from well over $100 a bar­rel in mid-2014, drop­ping be­low $30 a bar­rel at the start of this year be­fore re­cov­er­ing to the $40$50 range.

Crude oil prices slumped due to per­sis­tent over­sup­ply and a slug­gish global de­mand amid fierce com­pe­ti­tion among pro­duc­ers to pre­serve their mar­ket share.

The gloomy eco­nomic fore­casts for the Gulf oil ex­porters come de­spite a se­ries of aus­ter­ity mea­sures that in­cluded re­duc­ing sub­si­dies on power, fuel and other ser­vices in a bid to cut spend­ing and raise non-oil rev­enues.

GCC states cut their pub­lic spend­ing from $615 bil­lion in 2014 to $563 bil­lion last year.

A fur­ther drop to $519 bil­lion is ex­pected this year, KAMCO said.

The In­ter­na­tional Mon­e­tary Fund has wel­comed the aus­ter­ity mea­sures but warned that greater ef­forts are needed to plug bud­get deficits and re­turn to the black.

Photo: EPA

Cars wait in line at a gas sta­tion in Kuwait City. Kuwait is the last coun­try among Gulf states to in­crease the price of petrol.

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