Saudi Arabia to see high spending growth in 2019: Fitch
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Saudi Arabia will see one of the highest rates of recurrent spending growth this year, driven by the extension of cost-of-living allowances and reinstated annual bonuses for state employees, noted a report by Fitch Solutions on Wednesday.
Across the GCC, fiscal consolidation will slow in 2019 with some major economies likely to see deficits widen, the report added.
“Despite decelerating oil price and revenue growth, we believe most GCC governments will prioritize the stimulation of economic activity over strict fiscal prudence in the near term,” Fitch Solutions said.
“Many governments will continue to ramp up investment, partly to prepare for particular events (Expo 2020 in Dubai and the 2022 FIFA World Cup in Qatar) but more broadly to support long-term economic diversification agendas and stimulate job growth. This comes against a backdrop of still-weak nonhydrocarbon private investment,” it added.
That said, recurrent spending will in most cases remain the key driver of fiscal expansion as governments look to ease pressures on households' purchasing power brought about by measures such as VAT implementation and subsidy cuts, Fitch maintained, while forecasting both Saudi Arabia and the UAE to see a temporary widening of their fiscal deficits over 2019.