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Average Gulf government deficit exceeds 11% of GDP

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Staff Writer | June 3, 2017
Saudi Arabia street
Gulf countries   According to PwC

Gulf governments collectively registered a budget deficit of more than 11 percent of gross domestic product (GDP) in 2016 due to low oil prices, according to PwC.

Its latest Middle East research note said Oman was hardest hit with a deficit exceeding 20 percent of GDP last year while Kuwait coped best with the oil price slump, resulting in a deficit of 3.6 percent of GDP.

According to PwC economists, 2016 was probably the low point for oil exporters including most of the Gulf countries.

They added in the report that economic prospects in 2017 should improve, helped by stronger oil prices over the year.

"Nevertheless, oil prices still remain well below break-even levels for most oil exporters and fiscal reform and deficit financing will continue to be key policy priorities in 2017 and beyond," PwC noted.

PwC also said fiscal reforms in the Gulf region are hard to do and even harder to sustain - energy subsidies were cut across the board (resulting in a GCC average of 2.8 percent inflation).


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