...Temporary Fiscal Deterioration: Fitch Ratings expects the central government deficit to widen to 4.0% of GDP in 2026, from 3.5% in 2025, on temporary spending tied to the Strait of Hormuz crisis. Higher energy prices have lifted subsidy costs, notably butane compensation payments, support for transport operators and transfers to the national electricity and water company. This outweighs moderating revenue gains from tax reform and better compliance and collection. Easing Spending, Lower Deficits: Fitch expects the deficit to average 3.4% of GDP in 2027- 2028 as temporary Hormuz-related spending fades. Lower subsidies will drive most of the adjustment as energy prices normalise, while tax revenue stays broadly stable. On-budget capital spending will stay high, averaging 7.5% of GDP, ahead of the 2030 FIFA World Cup, but state-owned and other off-budget entities will undertake most infrastructure investment. High Debt, Favourable Structure: Fitch forecasts central government debt will stay...
