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Public Finance of GCC Countries Witnesses Significant Financial Surplus

The Statistical Center for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) logo
The Statistical Center for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) logo
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Public Finance of GCC Countries Witnesses Significant Financial Surplus

The Statistical Center for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) logo
The Statistical Center for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) logo

Data issued by the Statistical Center for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) indicate that the financial risks of the GCC countries will be low in the short term amid forecasts of stable or declining interest rates locally and globally.

The reports issued by Credit rating agencies also signaled an improvement in the sovereign bond rating of the GCC countries in 2023. It is also expected that the credit attractiveness of GCC countries will increase, which would allow for the rescheduling of their public debts at lower financial costs.

According to the estimates of the GCC-Stat, the public debt of the GCC countries is expected to stabilize at 28% of the GCC countries’ GDP during the years 2024 and 2025. The financial budget reform plans, which are based on improving the efficiency of public spending and programs to stimulate growth in non-oil sectors, would contribute to achieving a balance between maintaining the economic growth rate and the sustainability of public spending.

The data issued by the GCC-Stat also reveal that the public debt of the GCC countries has doubled over the past ten years to reach about $628 billion in 2023, after it was $144 billion in 2014. The volume of debt as a percentage of the GCC Countries’ GDP increased to reach its peak in 2020 at 40.3%, before declining in the following years to reach about 29.8% in 2023.

The total public finances in the GCC countries also recorded a significant deficit during 2014-2021. The highest deficit value was registered in 2015, with an amount of about $158 billion, which accounts for 11.1% of the total GCC Countries’ GDP. In 2020, a deficit of $128 billion was recorded, which represents 8.8% of the total GDP.

The public finances of the GCC countries witnessed a significant financial surplus in 2022 estimated at $134 billion, representing 6.1% of the gross domestic product, followed by a surplus of $2 billion in 2023.

The total public revenues in the GCC developed significantly during the period 2021-2023 to record about $641 billion in 2023. Oil revenues accounted for 62% of public revenues, compared to $723 billion in 2022, of which oil revenues accounted for 67%.

Total public spending in the GCC countries reached its highest levels in 2023, recording about $639 billion. Current spending accounted for 85% of the total public spending, compared to 15% for investment spending in the GCC countries.

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Türkiye’s Simsek Seeks to Calm Investors, Says Market Strains Will Be Managed, Sources Say

People flash mobile phone lights during a protest against the arrest of Istanbul Mayor Ekrem Imamoglu as part of a corruption investigation, in Istanbul, Türkiye, March 25, 2025. (Reuters)
People flash mobile phone lights during a protest against the arrest of Istanbul Mayor Ekrem Imamoglu as part of a corruption investigation, in Istanbul, Türkiye, March 25, 2025. (Reuters)
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Türkiye’s Simsek Seeks to Calm Investors, Says Market Strains Will Be Managed, Sources Say

People flash mobile phone lights during a protest against the arrest of Istanbul Mayor Ekrem Imamoglu as part of a corruption investigation, in Istanbul, Türkiye, March 25, 2025. (Reuters)
People flash mobile phone lights during a protest against the arrest of Istanbul Mayor Ekrem Imamoglu as part of a corruption investigation, in Istanbul, Türkiye, March 25, 2025. (Reuters)

Turkish Finance Minister Mehmet Simsek and Central Bank Governor Fatih Karahan told international investors on Tuesday that they would do whatever was needed to tame market turmoil triggered by the arrest of President Recep Tayyip Erdogan's main political rival.

Police detained Mayor Ekrem Imamoglu, Erdogan's main political rival, last Wednesday, and a court jailed him on Sunday pending trial on corruption charges, sparking Türkiye's biggest protests in more than a decade and a major market sell-off.

Simsek told investors he would not comment on judicial matters and the events of the last two weeks, but said there would be no lasting impact on the economy and that he intended to stay in his post, according to two sources on the call.

He also said there would be no change in approach to the economic turnaround program he introduced in mid-2023 when the country was in the midst of its most recent currency crisis.

"They steered almost completely clear of the political crisis," one participant on the call said.

A statement from the finance ministry after the call confirmed that Simsek had reiterated his view that there would be no lasting damage to the economy and that further measures would be taken if needed.

Central bank governor Fatih Karahan told the call that he sees the market turmoil as a temporary blip, one participant said. He also repeated something Simsek had said earlier, that Türkiye will do "whatever it takes" to tame inflation, two sources said.

Journalists were not invited to the call, but participants said Simsek added that the Treasury could reduce bond issuance as part of its response, and that it also had the option of so-called FX-linked bonds, that give buyers some protection against big currency swings.

The minister also said he expected Türkiye to benefit from better bilateral relations with the United States. Later on Tuesday, Turkish Foreign Minister Hakan Fidan is to meet Foreign Secretary Marco Rubio in Washington.

Veteran emerging market analyst Tim Ash at fund manager BlueBay said the call, which also detailed how "offshore" investors had accounted for 60% of FX demand during last week's selloff, had been a "coordinated effort to engage with the international investment community, and re-assure."

REBOUND

Markets were continuing to stabilize after the call drew to a close with the Istanbul stock market finishing the day up 4.5% and the lira steady at just under 38 to the dollar.

The Borsa Istanbul ended last week down 16.6%, its worst drop since the peak of the global financial crisis in October 2008. The lira had dropped more than 10% at the height of the rout on Wednesday.

Tuesday's moves also saw the banking sub-index win back another 5.3%. It slumped more than 26% last week and has now recovered around 7.5% of that.

The Treasury, central bank, the BDDK banking watchdog and capital markets board had already held a series of meetings with market actors over the weekend and announced several steps.

The measures had begun with the central bank raising the upper band of the interest rate corridor by 2 points to 46% in an interim meeting last week, pausing funding from the policy rate.

While the central bank took a tightening step of close to 400 basis points, it also sold around $14 billion in foreign exchange. Additionally, it has started liquidity note issuance and TL-settled forward foreign exchange sales transactions.

The Turkish central bank's net FX position dropped by some $27 billion due to FX sales last week since Wednesday, according to bankers' calculations from the bank's balance sheet.

Short selling on the Istanbul stock market has been banned for one month.

Türkiye's international sovereign bonds were also continuing to claw back some of last week's losses, with the 2045 maturity up almost 1 cent on the dollar at 84.6 cents on the dollar, Tradeweb data showed, after falling more than 3 cents last week.

Türkiye's five-year credit default swaps, which investors often use as a hedge against turmoil, eased again too, ending the day back under 300 basis points according to S&P Global Market Intelligence, having spiked to almost 330 from 260 last week.

Turkish lira implied FX volatility gauges and risk reversals eased slightly, although they remained highly elevated, having soared to their highest levels since the country's last currency crisis in mid-2023, data from Fenics showed.

Ahead of Tuesday's investor call, Himanshu Porwal, EM analyst at Seaport Global had said that the markets had already been reacting positively to the measures taken to settle the markets in recent days.

"I think they (central bank, finance minister) have been doing what is required. FX is usually the first trigger you look at and so far the move has been contained, so I think people are coming to terms with it already," Porwal said.