"Fitch" credit rating agency expected that the rise in oil prices will lead to a noticeable improvement in the financial balances and external reserves of the Gulf Cooperation Council countries in 2021, supported by the momentum of reforms that have been consolidated to varying degrees, since 2014, in response to oil price fluctuations.
“Fitch” estimates that the budgets of the GCC countries, with the exception of Bahrain, will achieve a fiscal surplus if oil prices average $75 a barrel in 2022. In the case of the current price of $85 a barrel, Bahrain's budget will also be close to the equilibrium rate. In a stress scenario of $45 per barrel on average in 2022, the fiscal balances would be in deficit across the region, and this would create the most pressure on Bahrain and then Oman.
The gradual reconfiguration of fiscal policies in the Gulf Cooperation Council (GCC) countries began with the decline in oil prices in late 2014. “Fitch” expects more fiscal reforms, especially in the lower-rated GCC countries, given the uncertainty about the outlook for oil prices in the context of the push towards the limit of global oil demand, and focus on improving core financial performance in the Gulf region while stripping it of the influence of oil habits.
Source (Al Khaleej Newspaper-UAE, Edited)
