PwC stressed three key challenges for the region’s economies. First, low oil prices resulted in large fiscal deficits for oil producing countries that now need to be reined in. GCC governments collectively registered a deficit of around -11 .1 % of GDP in 2016, ranging from an estimated -3.6 % in Kuwait to a burdensome -20 .6 % for Oman Second, fiscal reforms are hard to do and even harder to sustain: energy subsidies were cut across the board (resulting in a GCC average of 2.8% inflation); popular backlash against rising petrol prices has caused some governments to reconsider this policy, and yet many more difficult reforms are in the pipeline And finally, the issue of hidden costs for oil-importing countries manifested in sizable structural deficits in countries such as Egypt and indirectly, negatively affecting countries that heavily rely on remittances and exports from the GCC. Whilst this environment creates challenges for business, such as managing new taxes, the report identified a growing number of opportunities, particularly as the major Gulf economies look for alternative sources of financing. This includes the debt markets and privatisation initiatives.
Richard Boxshall, PwC Middle East’s economist, echoed the positive sentiment for the region’s economic outlook: “The flurry of activity in debt markets, privatisation and PPPs has only just got started and should generate interesting business opportunities in the next few years. Investors can expect to see GCC economies make increasing use of international debt markets and to work harder to attract foreign direct investment in the next few years.” He added: “Foreign investors will want to see that governments have credible and committed plans to control the public finances. Introduction of VAT and excise tax in the GCC is an early opportunity for GCC governments to signal to international investors their commitment to fiscal reforms.” The issue also highlights the growth potential of Egypt and Saudi Arabia, viewed by PwC as “pockets of opportunity” in the region.
OECD Data – UAE Development Co-operation In 2015, the United Arab Emirates’ (UAE) total net ODA reached USD 4.4 billion, representing a decrease in real terms of 4% over 2014. The ratio of ODA as a share of GNI also fell in 2015 to 1.18%, down from 1.26% in 2014. Data shows that ODA reached USD 4.1 billion in 2016 (1.12% of GNI). The decrease is mostly explained by a USD 56 million drop in ODA to North Africa, mostly to Egypt but also to Morocco. The UAE nevertheless remained well above the United Nations’ ODA/GNItarget for economically advanced countries of 0.7%. In 2015, the UAE provided its bilateral co-operation mainly to Egypt, Yemen, Jordan, Iraq, Morocco, Sudan and Pakistan. The main sectors of the UAE’s bilateral disbursements were programme assistance, economic infrastructure (energy and transport) and humanitarian aid. The UAE provides its bilateral programme mostly in the form of grants. Multilateral ODA accounted for 1% of the country’s total ODA in 2015, provided primarily through the United Nations (75%). Notably, the UAE is a participant in the Development Assistance Committee. Up until its merger with the Ministry of Foreign Affairs in February 2016, the former Ministry of International Co-operation and Development, created in 2013, maintained overall responsibility for setting policy, geographical and sectoral priorities; identifying modalities and mechanisms for foreign aid distribution and implementation; and documenting aid flows. In December 2016, the Ministry of Foreign Affairs and International Cooperation launched the UAE’s new development co-operation strategy for 2017-21 (Government of the United Arab Emirates, 2016), with the ultimate and ongoing goal of improving the region’s economic infrastructure consistently through the implementation of long-term measures.
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