GCC economies cutting back non-essential expenditures, introducing healthy reforms
Latest GCC budgets contrast with previous expansionary era
As government spending, a key driver of the region’s economic and social progress falls, Alkhabeer expects economic growth to be subdued in the region
Non-oil sectors showing signs of slowdown; PMI readings in UAE and KSA at multi-year lows

Jeddah, Saudi Arabia – 28 March 2016: Alkhabeer Capital, the asset management and investment firm based in Jeddah, Saudi Arabia, released today the 2016 edition of its report reviewing GCC governments’ budgets. The report analyses the latest budgets of the region’s governments, the recent reform measures announced and the broader, long-term implications of the political will to improve efficiencies, curb wasteful expenditures and instill fiscal discipline.

“The recent budgets in Saudi Arabia, Qatar, Oman and the UAE, for the first time in decades, saw cutbacks in expenditure, subsidy reforms and plans to diversify the revenue base, indicating that the Gulf countries are gearing up to cope with the recent downturn in oil markets,” said Alkhabeer Capital in its report. “Kuwait and Bahrain are also set to release their budgets in mid-2016 and are anticipated to undertake similar measures.”

Citing the emergence of government imperatives in the region to refocus budget priorities and reduce extravagance, Alkhabeer’s report expects expenditure levels in the GCC to reflect a cautious stance on spending as the region adopts unprecedented measures to counter the plunge in oil prices since June 2014.

The commitment of GCC countries to move away from expansionary budgets is expected to strengthen as oil prices remain at continually low levels. Recent budgets announced by nations in the GCC have shown a decline in overall expenditure levels. Saudi Arabia lowered its budgeted spending for 2016 by about 14%, compared to the actual expenditure in the previous year. Likewise, Qatar and Oman announced lower outlays for this year.