Kuwait’s Finance Minister Anas al-Saleh said the GCC countries face inevitable spending cuts because of weak oil prices, according to Reuters.
Saleh said: "We must undertake comprehensive economic reforms including the reform of imbalances in public finances."
This must be undertaken through boosting efforts to diversify away from oil and decrease dependence on oil revenue, which is now inevitable, the minister noted.
Oil prices dropped to a four-year low of below $83 per barrel in October, exposing swollen state budgets in the six-member GCC that also includes Saudi Arabia, the United Arab Emirates, Qatar, Oman and Bahrain.
The GCC budgets require currently a much higher average oil price to break even. If the recent drop is sustained, it could erode the large fiscal surpluses enjoyed for years.
This is considered a threat to small oil exporters such as Oman, which the IMF forecasts to tip into a budget deficit of 1.8% of GDP in 2016, and Bahrain, which could tumble deeper into the red with a 5.7% gap already next year.
Saudi Arabia may also run a budget shortfall of 1.3% of GDP in 2017, which would be its first since the global financial crisis slashed its crude export revenue in 2009.
Saleh said: "We must undertake comprehensive economic reforms including the reform of imbalances in public finances."
This must be undertaken through boosting efforts to diversify away from oil and decrease dependence on oil revenue, which is now inevitable, the minister noted.
Oil prices dropped to a four-year low of below $83 per barrel in October, exposing swollen state budgets in the six-member GCC that also includes Saudi Arabia, the United Arab Emirates, Qatar, Oman and Bahrain.
The GCC budgets require currently a much higher average oil price to break even. If the recent drop is sustained, it could erode the large fiscal surpluses enjoyed for years.
This is considered a threat to small oil exporters such as Oman, which the IMF forecasts to tip into a budget deficit of 1.8% of GDP in 2016, and Bahrain, which could tumble deeper into the red with a 5.7% gap already next year.
Saudi Arabia may also run a budget shortfall of 1.3% of GDP in 2017, which would be its first since the global financial crisis slashed its crude export revenue in 2009.
Source:
Mubasher
