GCC boosts spending in 2025
Gulf oil producers expect their budgets to recorded a combined fiscal deficit of around $54.2 billion in 2025 despite their conservative oil price forecasts.
The six Gulf Cooperation Council (GCC) countries, which created their economic, political and defense alliance in 1981, projected spending at around $542 billion and revenues at $487.8 billion this year, the GCC statistics centre (GCCStat) said.
'Oil earnings still account for the bulk of the GCC's revenues…the six members normally follow a conservative approach in calculating the breakeven price in their budgets to shun price fluctuations in the global market,' it said in a report this week.
The report noted that the 2025 budgeted spending was higher than in 2024 due to a rise in project and current expenditures, adding that public expenditure has remained the wheel of economic growth in the GCC states of Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the UAE.
Most of the GCC members have tailored their budgets over the past couple of years on a $70 a barrel price and varied crude production levels.
The report did not provide a breakdown for members' budgets but Saudi Arabia has projected a fiscal deficit of around $27 billion, nearly half the total GCC shortfall.
Kuwait expects a deficit of around $20 billion, the second largest in the GCC, and will likely borrow this year to fund the shortfall after a decision in March to revive its debt law following an eight-year hiatus.
Most members in the GCC, which controls over a third of the world's proven oil resources, have resorted to borrowing to fund the shortfall despite the massive overseas assets controlled by their sovereign wealth funds. This has led to a sharp increase in the public debt in some members.
'The deficit and the debt in the GCC has remained under control because they possess a comfortable fiscal space with the accumulation of huge assets abroad,' said Mohammed Al-Asumi, a GCC economic adviser.
(Reporting by Nadim Kawach; Editing by Anoop Menon)
(anoop.menon@lseg.com)
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