• Type: Business and industry issue, White paper
  • Date: 1/1/2014

Increased public spending causes economic strain – impacting the national energy industry 

Increased public spending
Governments, shaken by the strong tides of the Arab Spring throughout the region, have employed more young nationals in the public sector. The International Monetary Fund estimated that public spending in the GCC increased by 20 percent in 2011 from the previous year. This increased public spending across the region — with wages accounting for most of the increase in current expenditure, are illustrated in the chart below. It follows from this spending spree that the price of the barrel needed to balance budgets is at a historic high and rising further.

This economic strain impacts the national energy industry in two ways:

  • the obvious remedy to the budget crunch is to pump more oil and gas — which can pose a technical challenge to the NOCs
  • the energy industry is called on to create more jobs for nationals and opportunities for the private sector.

View larger chart image 



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