Saudi Arabia to report modest budget deficit in 2018: Fitch

21/07/2018 Argaam

 

The windfall from oil prices recovery will test the durability of fiscal improvements carried by Gulf countries, Fitch Ratings said in a report on Thursday.

 

Most Gulf countries saw significant improvements in their fiscal and external balances, driven by a higher average oil price, but that has been offset by additional spending, the report said.

 

Saudi Arabia is expected to post a modest deficit, while Kuwait and Abu Dhabi are set to return to fiscal surpluses this year.

 

“In Saudi Arabia, new non-oil revenue measures have been offset by additional spending,” the report said.

 

Meanwhile, Bahrain and Oman will continue to report mid-single-digit deficits, keeping their balance sheets under pressure.

 

Fiscal and external deterioration, along with geopolitics, is a risk factor for all GCC sovereign ratings, Fitch said.

 

“Relative vulnerability to oil prices is a factor of original starting points, policy responses, and the extent to which these factors have already been reflected in rating actions,” it added.

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