Lower Oil Prices Challenge Saudi Fiscal Policy
The sharp decline in oil prices raises difficult questions for OPEC+ and, if sustained, will have important implications for Saudi Arabia’s fiscal policy.
The sharp decline in oil prices raises difficult questions for OPEC+ and, if sustained, will have important implications for Saudi Arabia’s fiscal policy.
Aramco should be able to sustain its higher dividend payout through 2025, but beyond this it will be increasingly dependent on higher oil revenue.
Following progress addressing economic vulnerabilities, Oman is poised to enter a new phase of economic policymaking, armed with new policy tools and development initiatives.
The transfer of Saudi Aramco equity helps grow the PIF but could leave a hole in the 2024 government budget.
Given the volatility of hydrocarbon prices and other external shocks, Gulf Arab states can benefit from adopting countercyclical fiscal policies – a bold, but necessary, shift that will limit fallback during economic downturns.
Saudi Arabia’s Public Investment Fund is likely to become the world’s largest sovereign wealth fund by the end of the decade, but raising the resources to fund its ambitious domestic investment program may increase economic and financial risks.
The Saudi government is ramping up spending as it seeks to support economic development and diversification, pushing the fiscal balance into deficit despite high oil prices.
The Omani government deserves credit for sound economic policymaking and reform progress, but the longer-term outlook for the economy remains uncertain.
The Raisi government’s political rhetoric of submission to economic hardship fails to provide a tangible economic solution to tackle Iran’s economic crisis.
As Oman pursues its Vision 2040 reform agenda, many opportunities could stem from closer economic and long-term alignment with neighbors and other major trading partners.
Learn MoreThrough its careful examination of the forces shaping the evolution of Gulf societies and the new generation of emerging leaders, AGSIW facilitates a richer understanding of the role the countries in this key geostrategic region can be expected to play in the 21st century.
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