GCC Countries Report Significant Financial Surplus In 2022 And Continued Stability In 2023

The Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) has reported that financial risks in GCC nations are expected to remain low shortly. This outlook is supported by predictions of stable or falling interest rates both locally and globally. Credit rating agencies have also noted an improvement in the sovereign bond ratings of GCC countries in 2023.

Public debt within the GCC has seen a significant rise over the past decade, reaching approximately US$628 billion in 2023, up from US$144 billion in 2014. The debt-to-GDP ratio peaked at 40.3% in 2020 but decreased to about 29.8% by 2023. These figures highlight the changing financial landscape within the region.

GCC-Stat estimates suggest that public debt will stabilise at around 28% of GDP for GCC countries during 2024 and 2025. Financial reforms focusing on efficient public spending and growth in non-oil sectors aim to balance economic growth with sustainable public expenditure. These efforts are crucial for maintaining fiscal health while fostering economic development.

The total public finances of GCC countries experienced a notable deficit from 2014 to 2021, with the highest deficit recorded in 2015 at approximately US$158 billion, equating to 11.1% of GDP. In contrast, a surplus was achieved in recent years, with a financial surplus of US$134 billion in 2022, representing 6.1% of GDP, followed by a smaller surplus of US$2 billion in 2023.

Total public revenues across the GCC saw significant growth between 2021 and 2023, reaching about US$641 billion in 2023. Oil revenues made up a substantial portion, accounting for 62% of total revenues compared to US$723 billion in 2022 when oil revenues were at 67%. This shift indicates a slight diversification away from oil dependency.

Public spending reached its peak in the GCC countries in 2023, amounting to roughly US$639 billion. Of this expenditure, current spending constituted a large majority at 85%, while investment spending accounted for only 15%. This distribution highlights priorities within government budgets across the region.

The credit attractiveness of GCC nations is anticipated to improve further, facilitating lower-cost rescheduling of public debts. Such developments are expected to enhance fiscal stability and provide more flexibility for future financial planning within these countries.

With inputs from WAM