Higher oil revenues are expected to reduce GCC budget deficit this year by 82% to $14 billion compared to $79 billion in the full-year 2017, KAMCO said in a recent report, citing the International Monetary Fund’s (IMF) general government fiscal balance estimates.
KAMCO, which is a subsidiary of United Gulf Bank (UGB), attributed the drop in the GCC budget deficit to higher oil prices expected for 2018 and the ongoing revenue side initiatives and expense optimisation undertaken by GCC governments.
As a result, the region’s fiscal balance is forecast to turn to a surplus in 2019, recording $30 billion, against earlier expectations of a surplus only in 2020.
“Consensus of oil price forecasts and oil price futures point towards USD 70/barrel or higher, and this should aid GCC budgets in our view,” the report added.
Kuwait, UAE, and Qatar are projected to report budget surpluses in 2018 and 2019.
“The backdrop of higher oil prices will also aid the expansionary budgets for 2019, as announced by Saudi Arabia and the UAE in their preliminary budgets,” KAMCO highlighted.