Some countries could spend their way into budget deficit | GulfNews.com

Some countries could spend their way into budget deficit | GulfNews.com:



"Average oil prices have been well above the breakeven prices of oil for the GCC. As a result, excess spending has been comfortably met from buoyant oil receipts. In fact, GCC economies have, on aggregate, continued to register relatively large budget and current account surpluses.



But there are increasing concerns that the rapid rise in spending in recent years may not be sustainable over the long term. Fiscal breakeven oil prices (minimum oil price required to balance the budget) have risen significantly in the last decade, raising vulnerabilities in the event of a sharp and sustained downturn in the energy markets.



“The average GCC fiscal breakeven oil price was $75 per barrel in 2013. Even under assumptions of a significantly slower rate of increase in spending, the surpluses could turn to deficits in the medium term. Saudi Arabia, for example, could reach that point in 2017-18,” said Giyas Gokkent, senior economist of IIF, Africa/Middle East."



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