The Gulf Cooperation Council (GCC) countries are entering a period of financial stability, supported by improved sovereign bond ratings, declining financial risks, and successful fiscal reforms. According to GCC-Stat, public debt levels are stabilising, and fiscal policies are becoming more efficient, signalling a more resilient economic future for the region.
Improved credit ratings have enhanced the financial standing of GCC nations, attracting investors and lowering borrowing costs. With public debt expected to remain steady at 28% of GDP through 2024 and 2025, governments are focused on balancing economic growth with sustainable spending. These developments mark a shift from the significant fiscal deficits recorded over the past decade to a more robust financial footing.
In 2023, credit rating agencies reported improvements in the sovereign bond ratings of GCC countries. This improvement is expected to boost the region’s credit appeal, enabling the rescheduling of public debts at lower costs. Public debt in the GCC reached $628 billion in 2023, a sharp increase from $144 billion in 2014, though the debt-to-GDP ratio has significantly improved since its peak of 40.3% in 2020, declining to 29.8% in 2023.
GCC-Stat attributes this stabilisation to strategic fiscal measures, including reforms to enhance public spending efficiency and stimulate growth in non-oil sectors.
Between 2014 and 2021, GCC countries faced substantial fiscal deficits, driven by fluctuating oil prices and external shocks. The largest deficit, $158 billion (11.1% of GDP), was recorded in 2015, followed by a $128 billion deficit (8.8% of GDP) during the pandemic in 2020.
In 2022, the fiscal narrative shifted, with the GCC posting a surplus of $134 billion, equivalent to 6.1% of GDP. This momentum continued into 2023, albeit with a more modest $2 billion surplus. These surpluses reflect improved revenue collection and better expenditure management.
Revenue and spending trends
GCC revenues surged to $641 billion in 2023, driven by oil, which accounted for 62% of total revenues. This marked a slight decline from 2022, when oil made up 67% of the $723 billion in revenues, highlighting ongoing efforts to diversify income streams.
Public spending reached its highest level, $639 billion, in 2023. Current expenditures made up 85% of the total, while investment spending accounted for 15%, indicating a continued emphasis on immediate economic needs alongside long-term development.
The fiscal strategies employed by GCC countries aim to balance economic growth with sustainable spending. Efforts to expand non-oil sectors, improve public spending efficiency and implement targeted reforms are creating a more resilient economic framework. These measures are critical as the region navigates shifting global economic dynamics and prepares for future challenges.
