Gulf subsidy reforms not enough to plug deficit — Moody's

Fuel subsidy reforms by Gulf Arab states will help reduce pressure on budgets, but are not enough to offset deficits resulting from low oil prices, ratings agency Moody's said. Savings from increased fuel prices in the six Gulf nations will average 0.5 per cent of gross domestic product (GDP), around $7 billion, this year against an estimated deficit of 12.4 per cent of GDP, it indicated. Moody's forecast that the price of oil will average $33 a barrel in 2016, way below its price of around $110 a barrel before it began to decline in mid-2014. It estimated the price to be $38 a barrel next year. Moody's expects GCC states to take other fiscal measures such as raising corporate taxes and introducing value-added taxes in the face of a long period of low oil revenues.