Moody's Investors Service revealed that Saudi Arabia is more vulnerable to a decline in sovereign assets in the medium term, due to the repercussions of the Corona pandemic and the increasing withdrawal to compensate for lower oil prices.
"Moody's" indicated that the repercussions would lead to a significant erosion of protective margins in Saudi Arabia, which would reduce the financial strength of its sovereign funds and increase external risks.
The drop in oil prices caused by the epidemic has significantly increased the overall borrowing requirements of Gulf governments, which will be partly fulfilled through withdrawals from sovereign wealth funds.
The report stated that in the case of the Sultanate of Oman, a large double deficit would lead to a decrease in both international reserves and sovereign wealth fund assets, increasing the risks of external vulnerability in the medium term. It also revealed that the stock of sovereign wealth funds' assets in Qatar and Abu Dhabi are still more than enough to cover decades of fiscal deficit at current levels. In Kuwait, the report noted that the huge fiscal deficit led to the depletion of the liquid part of the smaller general reserve fund.
The Gulf States are going through the worst economic and financial crisis in their history as a result of the negative consequences of the outbreak of the Corona pandemic, and the drop in oil prices, the main source of income in the region, amid a decline in global demand.
"Standard & Poor's" agency predicted that the budget deficit of the Gulf States will reach 490 billion dollars in the four years extending from 2020 to 2023, amid rising financing needs in exchange for low oil revenues.
The list of the top 10 sovereign funds in the world includes 4 Arab funds, led by the Abu Dhabi Investment Authority (UAE), with assets of $579.6 billion, and ranked third in the world, according to the latest data of the Sovereign Wealth Funds Institute "SWFI".
Source (Al-Araby Al-Jadeed Newspaper, Edited)
