Dr. Khalid Al-Shafi
The Gulf Cooperation Council (GCC), which includes Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman, posted a surplus of $350bn last year, according to a report released by the International Monetary Fund (IMF). This figure exceeded China’s surplus by more than 80 percent.
Revenues from oil exports are deposited at central banks, which invest most of these proceeds in safe portfolios like US treasury bonds, the IMF report said.
Some of these revenues are pumped into sovereign wealth funds owned by the GCC member states, which buy foreign assets.
Some of these funds are allocated to government budgets, in which military and national security spending take the lion’s share. Spending on defence in the GCC member states rose by nine percent to $74bn last year.
It is forecast that military spending in the six GCC countries will hit $86bn by 2017. Naval defence spending alone is expected to reach $17.5bn by 2020.
More and more funds are also being allocated to social benefits and creating jobs in the GCC member states, which allot funds as well for developing non-oil sectors to withstand crude price fluctuations.
Now that we know how much these revenues are, where they come from and how they are spent, it is crucial to learn how to deal with them.
Analysts call on governments in the Gulf to enact a law banning spending more than 75 percent of oil revenues. They also call for raising the share of state proceeds pumped into sovereign funds for the sake of the future when oil reserves run out. It is also necessary to boost other economic sectors to increase tax revenues, which finance state budgets.
Consequently, by diversifying the GCC economies, more jobs will be created for our future generations in the coming 20 years.
The Gulf Cooperation Council (GCC), which includes Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman, posted a surplus of $350bn last year, according to a report released by the International Monetary Fund (IMF). This figure exceeded China’s surplus by more than 80 percent.
Revenues from oil exports are deposited at central banks, which invest most of these proceeds in safe portfolios like US treasury bonds, the IMF report said.
Some of these revenues are pumped into sovereign wealth funds owned by the GCC member states, which buy foreign assets.
Some of these funds are allocated to government budgets, in which military and national security spending take the lion’s share. Spending on defence in the GCC member states rose by nine percent to $74bn last year.
It is forecast that military spending in the six GCC countries will hit $86bn by 2017. Naval defence spending alone is expected to reach $17.5bn by 2020.
More and more funds are also being allocated to social benefits and creating jobs in the GCC member states, which allot funds as well for developing non-oil sectors to withstand crude price fluctuations.
Now that we know how much these revenues are, where they come from and how they are spent, it is crucial to learn how to deal with them.
Analysts call on governments in the Gulf to enact a law banning spending more than 75 percent of oil revenues. They also call for raising the share of state proceeds pumped into sovereign funds for the sake of the future when oil reserves run out. It is also necessary to boost other economic sectors to increase tax revenues, which finance state budgets.
Consequently, by diversifying the GCC economies, more jobs will be created for our future generations in the coming 20 years.
