GCC fiscal deficits likely to narrow in 2021: Fitch

GCC sovereigns will experience significant narrowing of fiscal deficits/GDP in 2021, as average Brent oil prices are forecasted at $58 per barrel (/bbl) in 2021, accompanied by further unwinding of Opec+ production cuts, a report said.

Meanwhile, five of the 14 Mena sovereigns are on negative outlook: Jordan, Kuwait, Oman, Saudi Arabia and Tunisia, reflecting the lingering hit to public and external finances and growth as a result of the Covid-19 pandemic and the fall in oil prices last year, as well as liquidity and funding uncertainties in Kuwait and Tunisia, said Fitch Ratings in a new report.

“Nevertheless, fiscal deficits will remain high, particularly in Kuwait and Bahrain. We expect only Abu Dhabi and Qatar to eke out fiscal surpluses. Persistent deficits elsewhere in the GCC will lead to continued debt issuance and/or drawdowns of assets, although sovereign assets remain sufficient to finance prolonged deficits in the higher-rated sovereigns,” the report added.

“High fiscal break-even oil prices illustrate the scale of the public finance reform challenge and mostly remain well above current or forecast oil prices (Fitch’s long-term assumption remains USD53/bbl).

“Renewed waves of infections continue to hamper external receipts, public finances, employment and GDP growth. Most countries in the region saw a rebound in coronavirus cases in 1Q21, and some, including Oman, Jordan and Kuwait, have re-imposed significant restrictions on economic activity after easing in late-2020.

“Some Mena countries are at the forefront of the global vaccination campaign, in particular Israel, the UAE, Bahrain and Qatar. However, the economic rebound will also depend on ending the pandemic elsewhere, particularly in Europe,” Fitch Ratings said in the report.- TradeArabia News Service

 

Source: http://www.tradearabia.com/news/BANK_381742.html

 

Share this page Share on FacebookShare on TwitterShare on Linkedin
Close

Discover the 'Made in France à Bahrain' Guide

'Made in France à Bahrain' - Edition 2021
is YOUR guide to the economic presence in Bahrain. Click here to view the online guide