Policy

GCC policy interventions to mitigate the economic impact of COVID-19

The Coronavirus has spread across the GCC countries, besides its immediate impact on the public health and the well-being of the residents and citizens, the outbreak will likely have significant economic consequences across the region. As the key economic activities in the region’s critical non-oil sectors like tourism, transportation is curtailed, we can expect a greater macroeconomic implication. In response to the crisis, the gulf region has introduced number of new economic measures to mitigate the impact of the coronavirus...

Funding 2.0 for GCC SMEs

Traditionally in the Middle East and North Africa (Mena), SMEs have found it difficult to access funding from banks. In the GCC countries, the share of SME loans in total bank loans has tended to be around 2%, as the following graphic illustrates. Figure: Share of SME Loans in Total Loans (%) Source: Union of Arab Banks Survey, 2011 Entrepreneurs in the GCC, with respect to receiving bank loans, are known to face time-consuming documentation, daunting penalties on early repayments,...

Fuel Price Hike in the UAE

In July 2015, the UAE announced that, effective from August 1, 2015, it was moving from a system of fixed and subsidized fuel prices to a system of adjusting prices monthly, in line with global price trends . Though the exact details of the pricing formula were not released, it was made clear that the prices would be based on the average global prices, along with the addition of operating costs. In effect, the price of petrol would register an...

Fast Tracking Reforms in the UAE through Spending Cuts

A report released by the UAE central bank towards the end of July 2015 indicated that the government is likely to cut spending by 4.2% in the fiscal year of 2015. According to the report, consolidated government spending is expected to decline to Dh460.6bn ($125.5 bn), from Dh480.8bn ($131 bn) in 2014. It is notable that the projected spending cut is the first such instance in 13 years. Many analysts pin the reason for the spending cut on the recent...

Implications of removing Currency Peg for GCC

Key Questions What is currency pegging? Why do countries opt for it? When a country fixes the exchange rate of its currency to another country’s currency to control the value of a currency, it is known as currency pegging or "fixed exchange rate" or "pegged exchange rate". For example, if a country pegs its currency to the U.S. dollar, the value of its currency will be controlled so that it rises and falls with the dollar. The reason why countries...