Stimulus spending and monetary easing has provided the liquidity needed to keep economies moving and companies solvent through the lockdowns of 2020. And there is no question that fiscal support will continue well into 2021.
But there is a price to pay for these fiscal support measures.
The increased spending, allied with the loss of revenues, has seen fiscal deficits in the GCC rise from an average of 1.9 per cent of GDP in 2019, to 9.2 per cent in 2020, according to the IMF, similar to the rises seen from 2014 to 2016.
At the same time, sovereign debt in the region is projected to rise to an average of 29 per cent by the end of this year.
The legacy will be felt for years to come.
The November issue of MEED Business Review considers the weight of Covid-19’s impact on regional fiscal reform efforts and the long shadow it will cast over future budgets.
Other must-read sections in the November 2020 edition of MEED Business Review include:
> AGENDA: The Gulf’s fiscal space shrinks
> BOARD REPORT: Monthly Mena news roundup
> BIG INTERVIEW: Adio's head of infrastructure partnerships, Mohamad al-Dhaheri
> KUWAIT: New emir offers stability
> IMF FORECAST: Hopes fade for a swift economic recovery
> GOVERNMENT FINANCE: What to expect budget-wise in 2021
> EPC CONTRACTOR RANKING: Asian firms top EPC contractor ranking
> LEADERSHIP: The case for environmental sustainability in the GCC
> INSIGHT: UAE set for post-Covid recovery in 2021
> GULF PROJECTS INDEX: Iraq growth buoys Gulf projects index> BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts
We hope you find the November issue of MEED Business Review informative.
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