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Wednesday, April 24, 2024 17:51 GMT
The Institute of International Finance (IIF), a global financial industry body has projected a decline in hydrocarbon revenue of GCC states from US$326 billion in 2019 to US$200 billion in 2020. IIF expects the aggregated fiscal deficit to widen from 2.5 % in 2019 to 10.3 % of GDP in 2020, equivalent to US$144 billion, assuming an average Brent oil price of US$40 per barrel.Saudi Arabia, Kuwait, Qatar, and the UAE, with large public foreign assets, are better placed to accommodate large deficits than Bahrain and Oman. According to the IIF, Bahrain can count on financial aid from its neighbors as a cushion against external pressure, Oman is emerging as an increasingly vulnerable spot in the region in light of its mounting debt."Lower hydrocarbon exports will also weigh on the current account, which we expect to shift from a surplus of US$88 billion in 2019 to a deficit of US$33 billion in 2020 despite the projected 15 % fall in imports. Capital outflows will continue to exceed nonresident capital inflows. As a result, consolidated GCC official reserves will fall by US$133 billion in 2020," the IIF said.Saudi Arabia’s reserves, while declining by US$52 billion, will remain sizeable at US$448 billion by end-2020, equivalent to 29 months of imports of goods and services.