Gulf states exercise fiscal restraint despite oil windfall

Al-Monitor Pro Members

Dr. Robert Mogielnicki 

Senior Resident Scholar, Arab Gulf States Institute in Washington 

Sept. 6, 2022

Governments in Gulf Cooperation Council (GCC) member states are in strong fiscal positions owing to elevated energy prices. Most regional states are poised to enjoy their first annual budget surplus in several years. Having recently emerged from the coronavirus-induced economic downturn, all GCC states will be cautious in their spending, preferring to double down on existing initiatives, strategies and projects.

The utilization of newfound financial resources will range from boring and practical (Oman and Bahrain) to slightly more experimental and riskier (Saudi Arabia and the UAE). Spending increases will be targeted, such as policies to ease inflationary pressure. Much of the surplus revenue will flow to or through sovereign wealth funds, while the digital economy and technology-oriented initiatives are likely to serve as key destinations for newfound financial resources.