Government funding deficit across the GCC is expected to exceed $180 billion in 2020 due to low oil prices and the economic repercussions of the COVID-19, according to a recent note by Standard & Poor’s.
The rating agency expect the surge in deficits to increase demand for debt issuance across the region. “We expect total GCC government debt to increase by a record-high of about $100 billion in 2020 alone, with an additional $80 billion run-down in government assets to finance an aggregate GCC central government deficit of about$180 billion,” S&P said in report.
Analysts at S&P anticipates GCC government balance sheets continue to deteriorate up until 2023. Most GCC sovereigns have demonstrated ready access to the international capital markets this year, and are in the enviable position of having substantial pools of external liquid assets to fund their fiscal deficits should market access become constrained.
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