Gulf nations forecast public debt to drop to 28% of GDP

TDT | Manama

Email : hussianm@newsofbahrain

In 2025, Gulf nations expect public debt to settle at 28 per cent of GDP, marking a turning point after years of borrowing and financial strain. The forecast, shared by the GCC Statistical Centre, comes as the region takes strides to balance growth and public spending through careful reforms and increasing revenues from non-oil ventures. Over the past decade, debt levels have surged, doubling from $144 billion in 2014 to $628 bn in 2023.

The debt-to-GDP ratio, which reached a peak of 40.3% in 2020, has since fallen to 29.8%. This decline reflects a determined effort to rein in borrowing while maintaining stability. Fiscal adjustments, aimed at improving spending efficiency and expanding non-oil sectors, have played a key role in this progress.

Between 2014 and 2021, the Gulf region endured a series of budget shortfalls, the largest of which occurred in 2015, with a deficit of $158 bn, equal to 11.1% of GDP. Another hefty shortfall came in 2020, amounting to $128 bn, or 8.8% of GDP. However, a turnaround came in 2022, when the region recorded a surplus of $134 bn, equating to 6.1% of GDP. A smaller surplus of $2 bn followed in 2023, further demonstrating the effectiveness of ongoing fiscal measures.

Government revenues have shown marked growth, climbing to $641 bn in 2023, with 62% coming from oil. This marks a shift from 2022, when oil revenues made up 67% of the $723 bn total, suggesting that nonoil sources are steadily gaining ground. Meanwhile, government spending reached a peak of $639 bn in 2023, with 85% channelled towards day-to-day expenses and 15% allocated to long-term investments.

As interest rates remain stable or decline locally and globally, Gulf countries are seizing the opportunity to manage debt more effectively.