Moody's: Weak Oil Affects Kuwait Most Among GCC States

Kuwait is the GCC sovereign most exposed to the prolonged decline in oil prices caused by the COVID-19 pandemic, with a -29.2 % oil and gas revenue shock, said Moody’s, while Bahrain is the least exposed of the GCC states, with a revenue impact of -4.2 %. The impact of the coronavirus shock on oil and gas revenue, based on the assumption that oil prices average about US$35 per barrel this year.

Kuwait was followed by Saudi Arabia with a revenue shock of -12.7 %, Oman with -12.2 %, Abu Dhabi with -11 % and Qatar with 7.8 %. In a webinar hosted by Moody’s on the impact of the pandemic and lower oil prices on GCC sovereigns, Alexander Perjessy, VP, senior analyst for Moody’s sovereign risk group, said: “The UAE and Qatar are likely to be able to able to offset a fairly large portion of the oil revenue lost this year through spending cuts.

“The fiscal measures implemented in Kuwait and Bahrain will not really offset anything, will only widen the deficits. “Oman’s spending cuts, around 4 % of GDP, will likely fall short quite significantly offsetting the large oil revenue loss,” Perjessy said. In Saudi Arabia, large spending cuts and the tripling of VAT is likely to create a lower fiscal deficit than would otherwise be the case, he said.