MENA | Oil price rise eases pressure on GCC budgets

The rise in the oil price closer to budget breakeven levels across the Gulf
Cooperation Council (GCC) countries alleviates pressure on their public
finances. Extra income may translate into higher spending, aiding the region’s non-oil recovery, particularly in sovereigns with cheap access to debt markets.

What you will learn :

  • In our baseline, we assume spending does not deviate from approved budgets and forecast the regional fiscal deficit at 3.9% of GDP in 2021, down sharply from an estimated 11.5% in 2020, thus lowering borrowing needs.
  • Saudi Arabia has announced a 7% budget cut for 2021 but it now has room to ease up on austerity while keeping the fiscal deficit within the projected target of 4.9% of GDP. Under our baseline forecast, the deficit falls to 1.7% of GDP.
  • Crude oil prices have surprised on the upside, rising by about 25% year-to-date due to a stronger oil demand outlook and OPEC+ supply restraint. 

Topics: Crude oil prices, Oil prices, MENA

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