Credit FAQ: GCC Government Funding Needs Increase Sharply On Low Oil Prices And COVID-19

Government funding needs in the Gulf Cooperation Council (GCC) have increased significantly in 2020, as low oil prices and the economic repercussions of the COVID-19 pandemic have significantly widened governments' fiscal deficits. We expect total GCC government debt to increase by a record-high of about $100 billion in 2020 alone, with an additional $80 billion run-down in government assets to finance an aggregate GCC central government deficit of about $180 billion. Based on our macroeconomic assumptions, we expect to see GCC government balance sheets continue to deteriorate up until 2023. Most GCC sovereigns have demonstrated ready access to the international capital markets this year, and are in the enviable position of having substantial pools of external liquid assets to fund

...July 20, 2020 Government funding needs in the Gulf Cooperation Council (GCC) have increased significantly in 2020, as low oil prices and the economic repercussions of the COVID-19 pandemic have significantly widened governments' fiscal deficits. We expect total GCC government debt to increase by a record-high of about $100 billion in 2020 alone, with an additional $80 billion run-down in government assets to finance an aggregate GCC central government deficit of about $180 billion. Based on our macroeconomic assumptions, we expect to see GCC government balance sheets continue to deteriorate up until 2023. Most GCC sovereigns have demonstrated ready access to the international capital markets this year, and are in the enviable position of having substantial pools of external liquid assets to fund their fiscal deficits should market access become constrained. Here, S&P Global Ratings addresses frequently asked questions from investors on the funding of GCC governments' fiscal deficits in...

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