Bahrain Needs to Set Oil Price Barrel at 94$ to Achieve Fiscal Balance
2020-05-28 - 6:23 p
Bahrain Mirror: In its latest report on the effects of the Coronavirus epidemic on the economies of the Gulf States, the World Credit Rating Agency Fitch said that Bahrain will need the oil price barrel to be $94 to reach the point of fiscal balance.
In a new research report on the effects of the Coronavirus on the overall finances of the GCC countries, the agency predicted that most GCC countries will record fiscal deficits ranging between 15% and 25% of GDP in 2020, while Qatar's deficit will be only 8%, assuming the price of Brent crude at $35 per barrel and the full compliance of the GCC to OPEC's agreement to reduce production, which has led to significant reductions in oil production.
The World Credit Rating Agency believes that, regardless of oil revenues, the direct impact of the coronavirus on non-oil revenues in the budget will be through the postponement or suspension of various government fees and taxes, a key component of all GCC countries in economic stimulus packages. In general, non-oil primary revenues can be reduced as a result of economic turmoil, which constitutes a small share of total revenues.
Fitch noted that the main focus so far has been on fiscal consolidation efforts in spending, particularly in Bahrain, Oman and Saudi Arabia. Some expenditure items could be reduced as a result of that economic closure, for example for government officials, overtime, travel allowances or capital expenditure.