Renewed focus on Gulf’s fiscal positions

The fresh fall in oil prices has turned attention back to fiscal positions in the Gulf, with the UAE’s government the latest to announce measures to rein in spending. The UAE plans to deregulate fuel prices and, while details are sketchy at the moment, this appears to be the most ambitious fiscal reform yet seen in the Gulf. That said, this is not a terribly rigorous standard. Saudi Arabia has stated a plan to “rationalise” public sector employment, but there is little evidence that this is actually happening. And Kuwait has recently scaled back its subsidy reform plans. With oil prices set to remain low, we do ultimately expect more fiscal tightening in the region. However, given large government savings and concerns about social unrest, progress is likely to be slow-going.