The GCC’s fiscal plans may prove unsustainable

This year’s fiscal stimulus packages in the Gulf Cooperation Council (GCC) countries have increased the risk of a spending squeeze in the next 10 to 20 years. Admittedly, enormous foreign currency reserves, low public debt levels and consistent fiscal surpluses mean that funding government expenditures in the near term should not be a problem. But, given that the fiscal break-even oil prices have reached $80 per barrel and recent spending commitments are difficult to scale back, a prolonged period of low oil prices could ultimately lead to a fiscal squeeze across the region.