3.2 C
New York
Sunday, November 22, 2020

GCC: Government Funding Deficits May Rise Above $180b in 2020

Government funding deficit across the Gulf Cooperation Council, GCC is expected to rise above $180 billion in 2020 due to low oil...

Latest Posts

Black Panther Star, Chadwick Boseman Dies of Cancer

Chadwick Boseman, star of “Black Panther,” has lost the fight against cancer, he was announced to have died in his home on...

5 Ways to Get on Well With Distant Co-Workers

Imaginatively, you could probably create a mental picture of your office right now; perhaps it’s literally by the cafeteria, or maybe it’s...

Diego Costa to Reunite with Mourinho in Spurs as Matt Doherty Undergoes Medical

Having defeated Reading on Friday in the pre-season as they continue their preparations for the 2020/21 Premier League campaign, Spurs are looking for...

Ondo Election: No alternative to Governor Akeredolu

A governorship aspirant and the Executive Director of the Niger Delta Power Holding Company Limited, NDPHC, Engr. Ife Oyedele has claimed there...

GCC: Government Funding Deficits May Rise Above $180b in 2020

- Advertisement -

Government funding deficit across the Gulf Cooperation Council, GCC is expected to rise above $180 billion in 2020 due to low oil prices and the economic repercussions of the coronavirus, a recent note by Standard & Poor’s said.

The rating agency expects 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,” Standard & Poor said in a report.

Analysts at Standard & Poor anticipates Gulf Cooperation Council, 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.

S&P’s projections show that Gulf Cooperation Council, GCC sovereigns’ central government deficits will reach about $490 billion cumulatively between 2020 and 2023. About 55 per cent of this deficit relates to Saudi Arabia, the GCC’s largest economy, followed by Kuwait with 17 per cent and Abu Dhabi with 11 per cent.

GCC: Government Funding Deficits May Rise Above $180b in 2020
GCC financing mix
Image Credit: S&P

The projections on debt is based on central government balance and estimates of government debt refinancing and income related to the sovereign wealth fund, as including this would obscure the picture of governments’ funding needs.

Gulf Cooperation Council, GCC’s aggregate average government debt is projected to reach 18 per cent of GDP this year compared with 5 per cent in 2019.

“We expect fiscal deficits will shrink from 2021 given our assumption that oil prices will improve and the tapering of oil production cuts in line with the April 2020 OPEC Plus agreement,” S&P said in a report.

GCC: Government Funding Deficits May Rise Above $180b in 2020
GCC government balances Image Credit: S&P

Saudi Arabia’s deficit makes up the majority of the GCC fiscal deficit in nominal terms. As a percentage of GDP, however, Kuwait has the highest 2020 central government deficit-to-GDP ratio of 39 per cent , followed by Oman (17 per cent), Saudi Arabia (15 per cent), Abu Dhabi (13 per cent), Bahrain (12 per cent) and Qatar (10 per cent).

Since the sharp fall in oil prices, many GCC sovereigns have posted sizable central government deficits. These increased funding needs prompted total GCC government debt issuance in local and foreign currency of over $90 billion in 2016 and 2017. “We expect a new record high of about $100 billion in 2020. We then expect total annual debt issuance to trend down toward $70 billion by 2023, largely driven by our expectation of a narrowing of Saudi Arabia’s fiscal deficits over the period,” S&P said.

- Advertisement -

Latest Posts

Black Panther Star, Chadwick Boseman Dies of Cancer

Chadwick Boseman, star of “Black Panther,” has lost the fight against cancer, he was announced to have died in his home on...

5 Ways to Get on Well With Distant Co-Workers

Imaginatively, you could probably create a mental picture of your office right now; perhaps it’s literally by the cafeteria, or maybe it’s...

Diego Costa to Reunite with Mourinho in Spurs as Matt Doherty Undergoes Medical

Having defeated Reading on Friday in the pre-season as they continue their preparations for the 2020/21 Premier League campaign, Spurs are looking for...

Ondo Election: No alternative to Governor Akeredolu

A governorship aspirant and the Executive Director of the Niger Delta Power Holding Company Limited, NDPHC, Engr. Ife Oyedele has claimed there...

Don't Miss

Outside BBNaija; Yes, Yes, I Am in a Relationship – Laycon (Video)

Big Brother BBNaija housemate, Erica on Monday, said her choice of Deputy Head of House made her feel like she had betrayed...

BBNaija: I Will Beat Up Anyone Who Embarrasses Me On National TV – Kiddwaya

Big Brother Naija, BBNaija housemate and billionaire son, Kiddwaya, has blown hot threatening to beat up anyone who dares or makes any...

Bandits Kill Over 20 Villagers in Zamfara, Sate Governor Hometown

Unknown bandits have unleashed fresh attacks, killing many people in Maradun Local Government Area of Zamfara State, the hometown of the state...

Nigerians Fire Obasanjo Over Comments on Kashamu’s Death

Former President, Olusegun Obasanjo has come under fire over some comments made in the condolence letter he wrote to mourn the demise...

Lewandowski on the Brink of Breaking Ronaldo’s Record After Chelsea Win

Bayern Munich forward, Robert Lewandowski, needs five goals to break Cristiano Ronaldo’s record, after scoring twice in their 4-1 win over Chelsea...

Stay in touch

To be updated with all the latest news, offers and special announcements.