Awash with petrodollars only a couple of years ago, times have certainly changed for the Gulf countries. Between June 2014 and February 2016, the international oil price plunged by 70% and the IMF forecasts that GCC states’ oil export earnings will fall by $300bn in 2016. This is in line with MEES calculations of a fall of around $309bn since 2014.

Little surprise then that this has led to ballooning public deficits – the size of which have not been experienced since the late 1990s. Moody’s forecasts that all six GCC sovereigns will post fiscal deficits in 2016, ranging from around 14% to 17% of GDP in Bahrain, Oman and Saudi Arabia, to the high single digits in Kuwait, Qatar and the UAE. While the latter three governments have comparatively smaller deficits, Bahrain, Oman and Saudi Arabia have more limited fiscal space and higher social constraints. (CONTINUED - 1975 WORDS)