LONDON: The sovereign ratings of countries such as Bahrain, Oman and Jordan have been boosted by expectations of support from oil-rich Gulf donor states, according to a new report from S&P.
But actual disbursements may fall short of the promised amounts while budget grants are becoming less prevalent as deposits in central banks and other forms of conditional concessional funding are increasingly the norm.
“We anticipate that GCC sovereigns will likely prioritize funding to key regional partners in the context of volatile prices, weaker GCC net asset positions, and their respective domestic agendas of diversifying their economies awat from hydrocarbons,” S&P Global Ratings said.
Saudi Arabia, the UAE, Kuwait and Qatar this year pledged to give around $50 billion in total aid to 10 countries in the Middle East and Africa.
Beneficiaries included Jordan, Egypt, Bahrain and Morocco.
As a proportion of GDP, funding support from GCC countries has been highest in Jordan, where the economy has absorbed large numbers of Syrian refugees since the start of the Syrian conflict in 2011.
However in absolute terms, Egypt has received the most donor support, S&P said.
Gulf states have pledged large sums as geopolitical risks have increased in the form of tensions between Iran and Saudi Arabia and ongoing conflicts in Yemen and Syria as well as the boycott of Qatar by some of its neighbors.
Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises
Gulf states $50bn largesse supports Mideast sovereign ratings as geopolitical risk rises
- Fewer direct disbursements being sent from Gulf
- Aid packages align with regional strategic interests
