Public finances across the Gulf Cooperation Council (GCC) are projected to stay on a steady, resilient path, with public debt anticipated to stabilize at about 28 percent of GDP in 2024 and 2025. The latest figures from the Gulf Statistical Center underscore a positive fiscal outlook for the region, building on a 2023 surplus of roughly $2 billion and continuing a broader trajectory of fiscal consolidation and prudent spending. This upbeat assessment follows a history of strong fiscal results in recent years, including a substantial surplus in 2022 and a measured but persistent improvement in debt dynamics through the period.
Fiscal Stability and Debt Trajectories
In the GCC, the balance between revenues, spending, and debt has shown resilience even as the region navigates volatile global energy markets and shifting macroeconomic conditions. The GCC’s projected stabilization of public debt at 28 percent of GDP in 2024 and 2025 reflects a governance framework that emphasizes sustainability, efficiency, and longer-term planning. The debt-to-GDP ratio, which peaked at 40.3 percent in 2020 amid unprecedented economic pressures, has fallen to 29.8 percent by 2023, signaling a meaningful rebalancing of the public balance sheet. This decline underscores a combination of stronger nominal GDP growth, continued revenue generation, and disciplined expenditure management, all of which have supported a healthier debt outlook even as the region maintains robust investment and development programs.
A critical backdrop to these dynamics is the stated surplus trend that has characterized GCC fiscal outcomes in recent years. After a 2022 surplus of $134 billion, equivalent to about 6.1 percent of GDP, the region posted a smaller but still positive surplus in 2023, estimated at $2 billion. These figures illustrate a broad continuity of fiscal discipline, where revenue collection and strategic cost containment have jointly contributed to a more favorable fiscal stance. The trend also reflects the impact of high commodity prices at times, structural reforms, and a stronger emphasis on debt management that seeks to reduce financing costs while preserving growth and development momentum.
The magnitude and timing of public debt levels also reflect historical expansions and subsequent stabilization relative to the GCC’s growth trajectory. Public debt rose from about $144 billion in 2014 to roughly $628 billion in 2023, illustrating the elevated debt stock that accompanies sizable capital expenditure and social programs over the past decade. Yet the debt burden as a share of economic output has moved lower, a result of GDP expansion and the normalization of debt through prudent fiscal policy. The overall picture suggests the GCC remains committed to balancing the need to fund large-scale public investments with the imperative of maintaining sustainable debt levels that are compatible with prudent risk management and favorable financing conditions.
Saudi Arabia’s recent public financial management reforms also contribute to the favorable debt outlook. Earlier this month, the Kingdom completed a significant transition to International Public Sector Accounting Standards on an accrual basis, marking a milestone in modernizing public sector financial reporting. This switch aligns the Kingdom’s accounting practices with international norms, improving transparency, comparability, and decision-making quality within the public realm. The accrual-based approach supports more accurate portrayals of liabilities, obligations, and real economic costs, reinforcing the framework for sound debt management and long-term fiscal planning as part of Vision 2030.
In the near term, financial risks for GCC member states are expected to remain low. GCC-Stat notes that the risk environment is being shaped by forecasts of locally and globally stable or even declining interest rates, which eases debt servicing burdens and improves the scope for refinancing on favorable terms. In addition, recent credit assessments cited by GCC-Stat indicate that the region’s credit attractiveness is likely to improve, potentially enabling a more advantageous balance between debt rescheduling and the cost of financing. This outlook suggests a modest but meaningful shift toward greater financial flexibility for GCC governments as they manage debt portfolios and pursue investment objectives.
Moody’s, a leading credit rating agency, has offered its own growth narrative for the GCC’s flagship economies. In its latest outlook, Moody’s projects Saudi Arabia’s economy to grow by 1.7 percent in the near term, with a clear acceleration to 4.7 percent in 2025 and 2026. For the United Arab Emirates, Moody’s foresees growth of 3.8 percent in 2024, rising further to 4.8 percent in 2025. These growth trajectories are consistent with a broader expectation of continued diversification, investment, and productivity gains across the GCC, reinforcing the case for sustained fiscal stability and the capacity to support higher public investment without compromising financial resilience.
Within this framework, GCC-Stat emphasizes that the planned fiscal budget reforms across GCC nations could play a pivotal role in harmonizing economic growth with the need for sustained public spending. By pursuing efficiency gains, reprioritizing expenditures, and enhancing revenue mobilization, these reforms aim to maintain macroeconomic balance even as public investments continue to expand in key sectors such as infrastructure, health, education, and digital government services. The reforms thus support a stable growth path while safeguarding credit quality and financial stability.
Revenue, Spending, and the Oil Link
A central dimension of the GCC fiscal story is the composition and evolution of public revenues and spending, particularly given the region’s heavy reliance on oil. In 2023, total public revenues in the GCC reached approximately $641 billion, with oil revenues contributing about 62 percent of the total. This reflects a continued dependence on energy markets for fiscal capacity, even as governments pursue diversification and efficiency programs to broaden the revenue base and reduce vulnerability to price swings. By contrast, in 2022 total public revenues stood higher at around $723 billion, with oil revenues accounting for roughly 67 percent of the total. These figures illustrate a shift in revenue composition that accompanies evolving fiscal policies and the impact of global energy demand dynamics on GCC budgets.
On the expenditure side, total public spending in the GCC reached its peak in 2023, totaling about $639 billion. This level marks the highest annual outlay recorded in the GCC to date, underscoring the magnitude of public investment and current spending required to sustain development and service delivery. Current spending accounted for about 85 percent of total public spending in 2023, while investment spending comprised the remaining 15 percent. This breakdown reveals a policy emphasis on ongoing operating expenses—such as salaries, subsidies, and routine services—while still preserving a substantial allocation for capital projects and long-term growth initiatives.
Despite the elevated spending in 2023, the coinciding revenue performance contributed to a narrow overall surplus, illustrating the careful balance that GCC governments have sought to maintain between sustaining essential services and advancing investment-led growth. The persistence of strong current expenditures reflects ongoing commitments to social protection, public sector compensation, education, health, and other core services, while investment allocations support infrastructure modernization, digital transformation, and strategic projects designed to enhance resilience and competitiveness.
Growth Outlook, Credit Environment, and Policy Implications
The region’s growth outlook is closely linked to expectations for domestic policy reforms, energy markets, and global macro conditions. The Moody’s projections for Saudi Arabia and the UAE indicate a trajectory of moderate near-term growth with meaningful accelerations in the mid-term. The Saudi expansion to about 4.7 percent in 2025 and 2026 suggests a robust revival of non-oil sectors and ongoing implementation of structural reforms that broaden the productive capacity of the economy. In parallel, the UAE’s projected growth of 3.8 percent in 2024 and 4.8 percent in 2025 signals continued diversification and investment in high-value sectors, including technology, tourism, logistics, and sustainable energy. These growth pathways are critical not only for GDP expansion but also for the revenue generation that underpins public services and investment programs, reinforcing the sustainability of fiscal policy.
A key feature of the GCC’s fiscal outlook is the expectation that improved credit conditions will accompany stronger growth. GCC-Stat’s assessment that credit attractiveness is likely to improve over time points to a favorable financing climate for sovereigns in the region. The prospect of debt rescheduling at lower financial costs is particularly welcome in a context where the region’s debt stock remains sizable, and where macroeconomic resilience is essential for maintaining investment-grade ratings and access to favorable borrowing terms. In this sense, the region’s reform agenda—spanning budgeting, accounting standards, and expenditure control—appears well aligned with the aim of preserving fiscal flexibility while advancing modernization and diversification goals.
Budget reforms are central to sustaining momentum. The plans highlighted by GCC-Stat emphasize striking a balance between preserving growth momentum and ensuring that public spending remains fiscally sustainable over the medium term. These reforms include measures designed to optimize revenue collection, control current expenditures, and enhance the efficiency of public investment. The broader objective is to sustain a path of economic expansion without allowing debt dynamics to outpace the underlying growth in GDP. By improving budgetary governance, transparency, and accountability, GCC governments aim to create a more resilient fiscal framework capable of supporting long-term development and social welfare.
The role of oil remains a defining factor for GCC fiscal performance, even as reforms broaden the non-oil growth base. Oil revenues have consistently formed a substantial portion of total revenues, but the region’s policy priorities increasingly seek to reduce reliance on oil income alone by expanding non-oil sources of revenue, improving market efficiency, and strengthening non-oil sectors. The shift toward more diversified revenue streams enhances fiscal stability, enabling governments to cushion shocks and sustain necessary public investments even when oil prices fluctuate. The data from 2023 and 2022 illustrate this dynamic: while oil revenue shares remain high, the absolute revenue base and the capacity to fund investment have grown, supporting a resilient fiscal architecture.
Public Finance Management and Reform Momentum
A notable element of the GCC’s ongoing reforms is the modernization of public financial management, which includes adopting international standards to improve transparency, comparability, and accountability. The acceleration of public sector reforms and the adoption of accrual accounting in Saudi Arabia serve as exemplars of a broader regional trend toward more sophisticated financial governance. Accrual accounting provides a fuller picture of fiscal responsibility, including liabilities, future obligations, and the true cost of public programs. These reforms enable more informed decision-making, more precise budgeting, and better alignment between fiscal policy and development objectives.
Budget reforms across the GCC are expected to contribute to a more favorable long-term balance between growth and public spending. By improving revenue administration, tightening expenditure controls, and prioritizing high-impact investments, GCC governments can maintain macroeconomic stability while continuing to support economic diversification and social development. The reforms are also anticipated to enhance the region’s capacity to navigate regional and global economic shifts, including changes in energy demand, financing costs, and geopolitical dynamics that influence public finance risk.
Risk Outlook and External Environment
The GCC faces a mix of domestic opportunities and external challenges. On the positive side, the near-term risk profile for fiscal stability remains low, driven by projections of stable or lower interest rates. This environment supports manageable debt servicing and a favorable climate for debt management and refinancing. Additionally, improvements in credit sentiment and the prospect of cheaper debt rescheduling bolster the region’s overall financial resilience.
Nevertheless, the GCC must remain vigilant to external shocks, including fluctuations in oil prices, global macroeconomic turbulence, and shifts in demand for energy. Oil-dependent revenue streams can introduce volatility into fiscal outcomes, even as diversification efforts take hold. The region’s ongoing reforms, rising non-oil sectors, and prudent fiscal governance will be critical in mitigating such risks and preserving the momentum of public investment and social services.
Looking Ahead: Policy Implications and Strategic Priorities
- Maintain the trajectory of debt stabilization around 28 percent of GDP through a careful mix of revenue enhancement and prudent spending. The balance will require continued optimization of operating expenditures while preserving the investment pipeline that underpins long-term growth.
- Accelerate the modernization of public financial management, including the ongoing transition to accrual accounting and strengthened budgetary governance to improve transparency and accountability.
- Pursue reforms that broaden the revenue base beyond oil, reinforcing fiscal resilience against commodity price volatility and enabling more sustainable funding for development priorities.
- Leverage favorable financing conditions to optimize debt maturities and reduce borrowing costs, while ensuring that debt issuance aligns with macroeconomic stability and strategic investment needs.
- Preserve and expand growth momentum through targeted investments in high-impact sectors, digital transformation, human capital development, and infrastructure that enhances productivity and regional competitiveness.
Conclusion
The GCC’s public finances are characterized by resilience, prudent governance, and a clear focus on balancing growth with fiscal sustainability. The projected debt stabilization at 28 percent of GDP in 2024 and 2025, alongside a modest 2023 surplus and a substantial 2022 surplus, underscores the region’s ability to manage debt levels while sustaining essential public services and ambitious development programs. The data show that debt accumulation over the past decade has been met with a corresponding expansion in GDP and revenue generation, enabling governments to fund strategic investments without compromising financial stability. Saudi Arabia’s shift to accrual accounting marks a meaningful step in strengthening public financial management, while Moody’s growth projections for Saudi Arabia and the UAE reflect a continued trajectory of diversification and modernization.
In the near term, the GCC faces the challenge of maintaining fiscal discipline in a context of high investment needs and ongoing diversification. However, stable or declining interest rates, improving credit conditions, and reform-driven governance provide a favorable environment for debt management and investment funding. By sustaining reforms, strengthening non-oil revenues, and continuing to invest in productive sectors, GCC economies are well-positioned to preserve macroeconomic stability, support public services, and advance long-term development goals. The region’s fiscal strategy remains anchored in prudence, transparency, and strategic vision as it moves forward in a complex, dynamic global economy.