KUWAIT CITY: Public debt of the oil-rich Gulf states is expected to double and assets decline by a third by 2020 as they seek to finance budget deficits due to sliding prices, a report said on Tuesday.

After having posted massive deficits of $160 billion last year and faced with a $159bn deficit in 2016, the six Arab states of the Gulf will have to borrow and tap into their huge fiscal reserves to finance the budget shortfall, said the report released by the head of research at Kuwait Financial Centre (Markaz), M.R. Raghu.

In 2012, in contrast, the Gulf states posted a combined surplus of $220bn.

The report said public debt of the six-nation Gulf Cooperation Council (GCC) will rise to 59pc of GDP in five years, from 30pc at the end of 2015.

Fiscal assets of the GCC states which stood at around 140pc of GDP, or over $2.2tr, at the end of last year, is projected to slide to just 100pc of GDP by 2020, Raghu said.

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, which together pump around 18 million barrels of oil daily.

Oil income contributed over 80pc of public revenues before crude prices plunged by around three quarters in value since mid-2014.

“Oil prices could stay low for a long time,” Raghu said.

A majority of analysts expect oil prices to average $43 a barrel in 2016 and $55 a barrel next year, he said.

Published in Dawn, February 10th, 2016