Foreign workers in the six-nation Gulf Co-operation Council (GCC) have drained more than $200 billion (Dh734.5bn) from local economies over the past seven years as they remitted much of their money home.
The funds transferred during 2001 to 2007 were much higher than the remittances of about $140bn (Dh514bn) during the previous seven-year period, an indication of the growing number of expatriates in the oil-rich region.
Over the past seven years, the total funds transferred by more than 12 million foreigners in the GCC were estimated at about $201.2bn (Dh738.9bn) and nearly 70 per cent of the funds were remitted from Saudi Arabia and the UAE.
Figures by the Abu Dhabi-based Arab Monetary Fund (AMF) and Gulf banks show Saudi Arabia has been the main victim of capital flight due to its relatively large foreign workforce, with remittances standing at nearly $105.3bn (Dh386.7bn) between 2001 and 2007. The UAE also saw big losses, with transfers of about $37.3bn (Dh136.9bn).
Remittances from Kuwait stood at $19.4bn (Dh71.2bn), while they were estimated at $16.4bn (Dh60.2bn) from Qatar, $14.2bn (Dh52.1bn) from Oman and $8.4bn (Dh30.8bn) from Bahrain.
Heavy financial transfers allied with high defence spending and sharp fluctuations in oil prices put pressure on the GCC countries’ budgets and current account balances during the 1990s – before they started to record large surpluses over the past few years due to a surge in crude prices. In 1998, when oil prices were as low as $10 a barrel, most GCC members reeled under high current account deficits while others recorded only nominal surpluses, such as the UAE, which had a surplus of about $144m (Dh528.8m).
Saudi Arabia, which controls a quarter of the world’s extractable oil deposits, suffered from a heavy current account deficit of about $13.14bn (Dh48.2bn) while Kuwait recorded a gap of nearly $2.2bn (Dh8bn). The other three GCC members – Qatar, Bahrain and Oman – also recorded shortfalls.
But the six states enjoyed large surpluses in the following years after oil prices began to climb to reach an average of $25 during 2000 to 2004, about $36 in 2005 and $52 in 2006. Last year, prices hit a record $69 a barrel. The price surge has combined with higher crude output to boost the GCC income. This has allowed the states to record high current account and budget surpluses and rebuild eroding reserves and slash debt.
This comes despite surging cash remittances by the large expatriate communities. UAE Government statistics show the country’s current account surplus hit a record $48.8bn (Dh179.2bn) in 2006 while it soared to its highest level of $146.6bn (Dh538.3bn) in Saudi Arabia. It was $44.2bn (Dh162.3bn) in Kuwait, $15.6bn (Dh57.2bn) in Qatar, $11.2bn (Dh41.1bn) in Oman and $3.1bn (Dh11.3bn) in Bahrain.
The GCC governments have not issued current account details for 2007 but preliminary estimates by the International Monetary Fund say the UAE surplus was $22bn (Dh80.7bn) while it was $69.9bn
(Dh256.7bn) in Saudi Arabia, $32.8bn (Dh120.4bn) in Kuwait, $2.8bn (Dh10.2bn) in Qatar, $2.1bn (Dh7.7bn) in Bahrain and a small deficit in Oman.
Foreign workers send $200bn back home