GCC aggregate budgeted expenditure in 2023 to be in line with 2022 level: Kamco Invest

The aggregate budgeted expenditure in the GCC or Gulf Co-operation Council countries (excluding Bahrain) during the current fiscal year is estimated to be in line with previous year levels at $487.1bn, according to Kamco Invest, a regional economic think-tank.
The aggregate budgeted revenues are estimated at $473.6bn, down 8.1% on an annualised basis, mainly due to a fall in crude oil prices this year compared with last year, Kamco said in a report.
In 2023, the budgeted oil price by most countries is above $60 per barrel, barring Oman which has based its budget on an oil price of $55 per barrel. The UAE did not disclose the oil price on which it has based its federal budget, it said.
The aggregate fiscal deficit for the GCC countries (excluding Bahrain) is expected to reach $13.5bn in 2023 compared to a surplus of $27.9bn previous year.
The report said the governments in the region announced expansionary budgets for sectors such as health care, education and infrastructure and have also planned large scale infrastructure and construction spending.
"At the same time, main focus has been given to re-alignment of non-oil sectors in the economy and its contribution going forward," Kamco said.
Saudi Arabia is expected to account for around 64.4% of the aggregate budgeted revenues during the year in the GCC. Kuwait and Qatar are expected to follow at 13.4% and 13%, respectively.
In terms of spending Saudi Arabia is expected to account for 61.7% of the aggregate expenditure in the GCC this year. Meanwhile, the overall GCC project pipeline is expected to reach $110bn in new project awards, according to MEED projects, with almost all countries in GCC slated to see growth on a year-on-year basis.
Finding that oil prices have remained volatile this year with strong support at $70 and a resistance at $90; the report said Brent crude spot averaged at $80.9 per barrel since the start of the year and is expected to average at $87 this year, according to Bloomberg consensus estimates.
The volatility in oil prices came from several factors including elevated inflation levels, uncertain demand growth in China, the ongoing Russia/Ukraine conflict, the more recent US debt ceiling talks and Opec+ cuts.
In terms of budget balance, the UAE is budgeted to breakeven while Saudi Arabia and Qatar are estimated to report a surplus ranging between $4bn and 8bn. Oman and Kuwait are expected to report deficits this year.
"It is expected that the actual deficit in 2023 may be significantly lower than the budgeted deficit due to the conservative estimate of budgeted oil prices," Kamco said.
In light of increasing oil prices, several governments have also taken into account an increase in government subsidies and grants, according to the report.