When will oil revenues run dry, and what will replace them when they do? Those are the existential questions facing economic policymakers of the oil exporting countries of the Arabian Gulf. Nowadays everyone including the Gulf states themselves agrees that demand for hydrocarbon fuels is likely to fall dramatically over the next three decades. How do regional governments
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How account deficits impact currencies
GCC countries have maintained their currency pegs based on their strong fiscal and current account positions. They usually have fiscal and current surpluses with solid oil revenues and exceptionally high levels of forex assets held by sovereign wealth funds and public institutions.
Despite constrained spending and marginally recent improvement in oil prices, an absence of new revenue-raising measures (with the exception of VAT in Oman) means that GCC governments’ fiscal deficits will narrow only slightly in 2021. Moody’s forecasts the median fiscal deficit to remain wide at 6 per cent of GDP in 2021, driving a further deterioration in fiscal strength, which will be most acute in Bahrain, Oman and Saudi Arabia.
How SWFs take care of government funding
The sovereign wealth funds (SWFs) of Abu Dhabi, Kuwait and Qatar have underpinned the ability of GCC economies to surmount the hurdles of lower oil prices and the coronavirus fallout, according to economists.
These SWF assets are likely to have grown last year due to supportive market returns and oil price recovery in the fourth quarter, despite some governments using foreign assets and other deposits to cover government fund requirements.
According to rating agency Fitch, estimated sovereign external assets of the SWFs of the UAE (Abu Dhabi), Kuwait and Qatar are sufficient to cover five to eight years of government spending and six to eight years of non-oil deficits at the current level of oil prices and government spending.
Published date: 17 January 2021 15:44 UTC | Last update: 2 months 1 week ago
Egyptian national carrier EgyptAir says it will start operating direct flights to Doha on Monday for the first time in three years.
Egypt shut down its airspace to Qatari aircraft and suspended flights to Qatar in June 2017, when it joined Saudi Arabia, the United Arab Emirates and Bahrain in imposing a blockade on the Gulf state, after they accused Doha of interfering in their internal affairs by allegedly supporting opposition groups.
Qatar blockade: What caused it and why is it coming to an end?Read More »
Egypt reopened its airspace to Qatari planes on 12 January. The move came seven days after the four states and Qatar signed a document in al-Ula, Saudi Arabia, that opens the door for the return of their normal diplomatic, political and trade ties.