The GCC (Gulf Cooperation Council) region is expected to see a deficit in government finances of approximately $160bn in 2015 on account of lower oil revenues, a new report has shown.
Budget deficits were recorded across all the GCC countries for the first nine months of 2015 as oil revenues plunged and state revenues fell below expenditure, Kamco Research said.
The current account balance for the GCC was also expected to “come in negative” in 2015, albeit marginally, Kamco said citing International Monetary Fund data.
Oil GDP estimate for the GCC is likely to almost halve in 2015, and contribute to an overall GDP decline of 16% y-o-y for the region.
Saudi Arabia, which accounts for almost 46% of the region’s GDP, witnessed a decline of 13.3% year-on-year (y-o-y) in 2015, as oil GDP went down by 43% over the period, based on preliminary estimates published.
Kamco expects 2016 to remain “a year of transition” in the GCC, as “governments reassess and implement steps to optimise state budgets and improve revenue side initiatives”, as the full year impact of lower oil revenues and government initiatives take effect.
Ratings agencies remain cautious on their outlooks for GCC countries, as witnessed from the S&P’s downgrade of Saudi Arabia’s debt rating for the second time in four months, which was cut to ‘A-/A-2’ from ‘A+/A-1’.
Credit lending trends remained positive in major GCC states, as credit disbursed by banks in Saudi Arabia, Kuwait and the UAE all went up above 8% in 2015, while credit lending went up higher by 15% y-o-y in Qatar, Kamco said. Money supply (M2) growth was negative in Saudi Arabia (-4.0%), Kuwait (-1.1%) on a quarter-on-quarter (q-o-q) basis in Q4, 2015; while the UAE, Qatar and Oman witnessed higher money supply compared to the previous quarter.
Qatar’s Q3, 2015 GDP receded by 2.9% q-o-q, as oil and gas related sectors went down by 12% over the same period, Kamco said.  
On a y-o-y basis, Q3,2015 GDP was down over 22%, while oil and gas related sectors went down by 47% over the same period. The non-oil sector however grew on q-o-q and y-o-y basis, as the private sector grew by 2.7% on a q-o-q basis and 0.8% on a y-o-y basis.
Non-oil government sector GDP improved by 2.1% q-o-q in Q3, 2015.
Total credit facilities continued the uptrend and stood at a record high level at the end of 2015 with an increase of 5.5% q-o-q to reach QR748.7bn as of Q4, 2015.
The growth was ascribed to both the public sector and the private sector, which grew q-o-q in Q4, 2015, as the public sector grew by 6.4%, while the private sector credit went up by 3.1% over the same period.
Within the private sector, larger sectors utilising credit real estate and consumption sectors recorded a growth in lending.
Real estate credit grew by 5.7% q-o-q in Q4, 2015, and by 27.4% y-o-y, while consumption credit grew by a lower 2.6% on a quarterly basis and 16.9% y-o-y.
Qatar’s broad measure of M2 money supply improved on a q-o-q basis, to add around QR3.9bn or 0.75% in Q4, 2015 and stand at around QR521bn as of December, 2015, after receding by 2.7% in Q3, 2015.
“The rise in M2 is mainly attributed to the increase in deposits in foreign currencies that added QR3.1bn on a quarterly basis in Q4, 2015,” Kamco said.