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Moody's Calls On GCC States To Implement Fiscal Reforms

by Lorys Charalambous, Tax-News.com, Cyprus

23 March 2016


Moody's Investor Service has said that the credit outlook of the Gulf Cooperation Council (GCC) states depends on their ability to implement medium-term fiscal measures that curb the erosion of public finances due to low oil prices.

According to Moody's, savings from increased fuel prices and a pan-GCC value-added tax (VAT) will average 2.5 percent of gross domestic product (GDP), which falls short of addressing fiscal challenges.

Moody's said it expects that the GCC's fiscal deficit will reach close to 12.5 percent of regional GDP in 2016, up from nine percent in 2015. It also said it expects the fiscal deterioration to be faster in Saudi Arabia, Bahrain and Oman than in the United Arab Emirates, Qatar and Kuwait, where reserves can cushion the short-term negative impact and allow a more gradual adjustment.

Funding of these deficits will lead to a rise in government debt and a decline in government financial assets, Moody's said.

TAGS: United Arab Emirates | tax | economics | value added tax (VAT) | Kuwait | Saudi Arabia | fiscal policy | gross domestic product (GDP) | Bahrain | Qatar | oil and gas | tax reform | Gulf Cooperation Council | Oman | Invest

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