The prolonged low oil price will force governments in the Gulf countries to seek funding from the private sector, says a consultancy.
The effect of cheap oil, which has severely reduced Gulf government revenues, is also forcing states to cut public spending and bring in structural reforms, says the report from Deloitte.
“Governments will have to seek for the private sector involvement, innovate and find alternative funding sources to fund their project requirements,” says Cynthia Corby, Middle East infrastructure and capital projects leader at Deloitte.
The price of a barrel of Brent crude, which is currently around $50, sank to below $30 at the end of last year after a holding steady at more than $100 for several years ending in 2014.
Saudi Arabia, which gets the vast majority of its government revenues from exporting oil, says it will cut spending by 11% this year. The UAE is expected to record its first current account deficit in decades and Qatar is reforming subsidies and cutting funding to some projects.
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