(MENAFN) The GCC countries are expected to begin considering adjusting their fiscal policies as the prices of oil continue with their steep decline, particularly in Bahrain and Oman, which are expected to be under the most pressure as oil prices are expected to USD80-85 a barrel in 2015, Arabian Business reported.
Between the six GCC countries, Kuwait and Qatar are the most resilient due to their very low fiscal and external breakeven oil prices, and large reserves, while Saudi Arabia and the UAE are slightly weaker in their fiscal positions and have a higher external breakeven oil prices, but Bahrain and Oman are the easiest to be affected by the lower oil prices because they have the highest fiscal break-even prices and the lowest reserve buffers in the GCC.
In terms of forecasted deficits, Saudi Arabia's fiscal balance is expected to turn into a deficit in 2015, while Bahrain and Oman's deficits will widen significantly to above 7 percent of their respective GDP, though Oman is expected to register the biggest deficit as all GCC countries except the sultanate are foreseen to register an account surpluses in 2015
Based on these figures, the GCC governments' fiscal adjustments to lower oil prices will vary, starting with expenditure adjustments on non-strategic investment projects, as well as revise their revenue-enhancing measures by starting to adjust their tariffs and other non-oil revenue, while the introduction of any new taxes would be left as a last resort.
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