Governments ‘defund’ assets in hostile macro environment
Issue 1003
- 29 Oct 2015
| 4 minute read
Fiscal pressures resulting from low oil prices are starting to hit home, with the International Monetary Fund estimating the six Gulf Co-operation Council (GCC) states will run a combined budget deficit of 13.2% this year, and some countries – including architect of the Organisation of the Petroleum Exporting Countries policy Saudi Arabia – likely to be even further in the red. A policy response is unavoidable, but governments’ willingness to deal with the issue comprehensively remains uncertain, with only a few options authorities can realistically consider: cutting spending, raising more debt, drawing on savings and/or selling assets.
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