The slide in oil prices this month has raised concerns in some quarters that the Gulf States will need to tighten fiscal policy. But while the prospect of this has been talked about in Oman, lower oil prices have received a muted reaction in the rest of the region. This shouldn’t come as too much of a surprise. After all, oil prices would need to fall further before most countries ran budget deficits. Even then, large savings and low debt levels mean that shortfalls could be financed for many years to come. In contrast to the Gulf, most of the North African economies will benefit from lower oil prices since they will help to narrow their large twin current and budget deficits.
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