THE CAPITAL’S BIG GAINS
dubai — Thanks to its strong assets base, high oil income and revenues from value-added tax, Abu Dhabi will post a budget surplus and is well-positioned among GCC sovereigns to overcome its funding needs over the next three years, analysts said.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the capital’s fiscal position has strengthened substantially with the reforms, consolidation and the rise in the oil prices.
“We expect to see a fiscal surplus in 2018. We believe that these factors and the strong fiscal buffers are supportive of a shift to an expansionary fiscal position, which should in turn bolster economic activity in 2019,” Malik said.
According to global ratings agency S&P, GCC countries will need around $300 billion to meet their financing needs between 2018 to 2021 with the majority related to Saudi Arabia.
S&P expects the funding needs of the GCC sovereign will have as percentage of GDP during the next three years.
“We estimate previous funding needs in 2015-17 were $450 billion — or 12 per cent of combined GDP — compared with an expected $300 billion over 2018-21 (5 per cent of GDP), and that total funding requirements over 2015-21 will come to around $750 billion,” Benjamin Young, primary credit analyst at S&P, said in a note released on Wednesday.
In order to meet their funding needs, Kuwait and Abu Dhabi will rely more on assets while Qatar and Bahrain’s financing needs will be met almost exclusively with debt.