Bahrain Mirror: Countries of the energy-rich Gulf are expected to accumulate $490 billion in deficits by 2023 due to the double hit of low oil prices and the coronavirus slowdown, Standard and Poors said in a report.

The six-nation Gulf Cooperation Council is estimated to post a combined budget deficit of $180 billion this year alone, the ratings agency highlighted, noting that it based its estimates on an average oil price of $30 a barrel this year, forecast to rise to $55 in 2022.

Government funding needs in the GCC, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), have increased significantly this year, S&P said.

"We expect total GCC government debt to increase by a record high of about $100 billion in 2020 alone," it added.

S&P also expected that an additional $80 billion will be withdrawn from government assets, estimated at $2 trillion, to plug the budget shortfall. "Based on our macroeconomic assumptions, we expect to see GCC government balance sheets continue to deteriorate up until 2023," when deficits would have accumulated to $490 billion, it said.

The coronavirus pandemic has hit global oil demand hard, leading to a crash in oil prices to a two-decade low before a partial recovery. Gulf countries have been hit hard by the pandemic and lower oil prices have exacerbated that, with most countries expected to post double-digit fiscal deficits this year.

The International Monetary Fund this month estimated the six GCC states stand to lose around $200 billion in oil revenues this year. The IMF also forecast that GCC growth in 2020 would shrink by 7.1 percent, the lowest in almost four decades, as a result of the pandemic and low oil prices.

S&P further estimated GCC central government deficits to reach about $490 billion cumulatively between 2020 and 2023, with 55 percent of that amount related to Saudi Arabia, the Gulf's largest economy, followed by Kuwait with 17 percent and Abu Dhabi with 11 percent.

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