Arab fiscal surplus hits record in 2006
Strong oil prices boosted the combined Arab fiscal surplus to a record level in 2006 and the UAE, Kuwait and Saudi Arabia accounted for more than two thirds of the balance, according to the latest official figures.
From a persistent deficit during the 1990s and early 2000s, the overall budget recorded the highest surplus of $140.6bn (Dh516bn) in 2006 and experts believe the actual surplus remained very high in 2007.
Figures published in the Joint Arab Economic Report for 2007, issued this week by the Abu Dhabi-based Arab Monetary Fund (AMF), showed the 2006 was much higher than the 2005 surplus of $89.5bn and the $35.5bn and $3.5bn recorded in 2004 and 2003. In 2002, the overall balance suffered from a deficit of around $24bn while the shortfall stood at $19.6bn in 2001.
In 2006, Saudi Arabia reported the highest budget surplus in its history after a surge in crude prices boosted its income by more than $30bn. The surplus stood at around $74.7bn compared with nearly $58bn in 2005 and a shortfall of about $5.4bn and $7.1bn in 2002 and 2001.
The UAE, the second largest oil exporter in the Arab world, also reported its highest ever fiscal surplus of around $19.7bn compared with $10.bn in 2005 and a record deficit of nearly $8bn in 2002. Kuwait’s fiscal surplus also peaked at nearly $23.5bn, more than four times its 2001 surplus. Two other key Arab oil producers – Algeria and Libya – reported budget surpluses of more than $15bn while the budgets of some non-oil members remained in deficit albeit lower than in previous years.
“The combined fiscal balance in the Arab world this year is expected to be in large surplus again, mainly those in the Gulf,” said Kuwaiti economist Jassim Saadoon.
“This is mainly due to the increase in oil prices which are expected to climb to a record $70 in 2007 or nearly $10 more than last year.”
The overall Arab fiscal surplus peaked in 2006 despite a sharp increase in actual expenditure, which also hit a record level of $347.5bn compared with around $259.3bn in 2005.
In 2006 spending was nearly double the expenditure 10 years ago and 60 per cent higher than the 2001 spending of $217bn.
The bulk of the increase in expenditure was in the UAE and Saudi Arabia, which boosted spending from $28.4bn in 2005 to $34.9bn in 2006 and from $92.3bn to $104.8bn respectively.
But the surge in expenditure was matched by a similar growth in the region’s revenues, which shot up by nearly 24 per cent to $488.2bn in 2006 from around $394.3bn in 2005 and only $197bn in 2001.
In 2006, the revenues of the UAE and its five partners in the Gulf Co-operation Council (GCC) – Saudi Arabia, Kuwait, Qatar, Bahrain and Oman – stood at around $318bn, nearly 65 per cent of total Arab income.
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