“We will now see if OPEC and Russia are able to freeze the bears in the oil market,” said Olivier Jakob, managing director at consultants Petromatrix GmbH. “The significance of the agreement is that it could remove the perception that OPEC is fighting for market share.”
- The meeting will be held this month 17th April to discuss the low oil price and diminish the productions ,because low oil price affects all the sectors in the Gulf countries ,especially the banks,It slow the growth and raise the budget deficits moreover exports and imports.
- So, the GCC begin to Lower public spending ,cut costs and introduce new revenue-enhancing measures that maybe affect the economic growth in 2016.more over it affect GCC public finances , and increasing debt levels.
- GCC s fiscal deficit may reach close to 12.5% of regional GDP in 2016, up from 9% in 2015,as the Moodys rating agency expects.
- In Saudi Arabia, Bahrain and Oman the fiscal deterioration to be faster than in the United Arab Emirates (UAE), Qatar and Kuwait, where reserves cushion the short-term negative impact and allow a more gradual adjustment.
- If the GCC government trys to fund these debt it will lead to raise the deficit,and will decline the government financial assets,slow going forward.
- Bahrain and Oman,have the biggest increases where it projects government debt to GDP to rise by 35 and 18 percentage points in 2016 from their 2014 levels, followed by Saudi Arabia, which will see its government debt ratio rise by at least 15 percentage points. For the other three GCC countries it expects increases of 11-13 percentage points of GDP.
- So, GCC countries have to start reforms immediately, by savings from the increased fuel prices and value-added tax will average 2.5% of GDP across GCC countries, which could relieving pressure on government balance sheets.
At the beginning of 2016 Moody’s oil price assumptions were revised downwards, to $33 per barrel on average in 2016 and $38 in 2017 amid higher-than-expected supply from the US and going forward to Iran and Iraq.