Gulf Cooperation Council countries may see their current-account surplus decline by $175 billion next year if oil prices stay about $80 a barrel, according to the International Monetary Fund.
The projected surplus for the six GCC countries may plunge from $275 billion to about $100 billion next year, Masood Ahmed, director of the Middle East and Central Asia department at the IMF, said in an interview in Dubai. The extended drop in prices would also “translate into an 8 percent reduction in the fiscal revenues of the GCC as a whole,” he said.
The price of Brent crude, the benchmark for more than half of the world’s oil, has dropped about 25 percent from this year’s high in June, trading at $85.95 a barrel as of 9:46 a.m. in London. Brent will trade at an average of $85 a barrel in the first quarter, down from a previous projection of $100, Goldman Sachs Group Inc. analysts wrote in a report.
Oil exports make up the bulk of government revenue of GCC countries — Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman. A surge in oil prices over the past decade has helped fuel hundreds of billions of dollars in spending on projects including roads, airports, ports and houses.
“There is an immediate impact from the drop in oil prices,” Ahmed said.
In the IMF scenario, Saudi Arabia, Oman and Bahrain risk running a budget deficit next year if their spending plans don’t change to cope with declining crude prices, he said.-Bloombeg
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