Gulf Arab economies will borrow a record amount this year to help cover budget deficits expected to add up to about $490 billion over the next three years, according to S&P Global Ratings.
For the five oil-reliant members of the Gulf Cooperation Council, the dual shock of the coronavirus pandemic and lower crude prices means sovereign balance sheets may “continue to deteriorate up until 2023,” analysts including Trevor Cullinan said in a report Monday. Debt will probably be used to finance about 60% of the central government fiscal shortfalls in 2020-2023, with asset drawdowns used to cover the rest.
S&P predicts GCC nations -- Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain and Oman -- will borrow about $100 billion and use up another $80 billion in government assets to cover this year’s financing requirement. Annual debt issuance will reach $70 billion by 2023 under the assumption that Saudi Arabia narrows its fiscal shortfall over the period.
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