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Wednesday, December 17, 2008

Oil states face an unfamiliar prospect: deficits

ABU DHABI — Gulf Arab oil producers, except Kuwait, face a budget deficit in 2009.

Citigroup said Qatar, Saudi Arabia and the United Arab Emirates face a budget deficit should the price of oil remain at current levels over the next year.

The bank said Riyad's deficit could reach 28 percent of the gross domestic product in 2009, compared to a 30 percent surplus in 2008.

"In effect, this means the members of the GCC will have to dig into their overseas wealth to keep their economies moving," Citigroup said.

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The bank said Kuwait would be the only Gulf Cooperation Council member expected to post a surplus in 2009, Middle East Newsline reported. The report also warned of a sharp decline in the economy of the UAE port of Dubai, a regional trading hub.

"Two specific concerns are Dubai's real estate sector and how it will refinance the debt it has built up in recent years," Citigroup said.



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