DUBAI, Sept. 28 (Xinhua) — The plunge in oil prices has prompted energy-rich Gulf Arab states to take austerity measures and build up smart, non-oil economies.
In the United Arab Emirates (UAE), Undersecretary and Ministry of Economy Abdullah Al Saleh said Wednesday that the government plans to issue a law to boost non-oil sectors, allowing foreigners to have total ownership of firms “in some economic sectors” based in the UAE, instead of the current ceiling of 49 percent, by the end of this year.
On Monday, the ruler of Dubai, another UAE sheikhdom, Sheikh Mohammed Bin Rashid al-Maktoum,
Meanwhile, Saudi Arabia will cut the salaries of ministers and Shura Council members by 20 percent and 15 percent respectively, Saudi Press Agency reported.
Annual accommodation allowances and car expenses were also reduced by 15 percent for the Shura members.
To cut public spending, subsidies in oil, electricity and some public services are being reduced in Saudi Arabia, the UAE, as well as Bahrain and Qatar.
The slump of the oil prices since mid-2014 has put unprecedented pressure on public budgets of the Gulf states.
In October 2015, the International Monetary Fund (IMF) warned that the six Gulf states could pile up a combined budget deficit of 700 billion U.S. dollars over the next five years if they continue current subsidies and still rely on oil and gas as major revenue sources.
The GCC states had a fiscal surplus of 600 billion dollars in the previous five years.
Oil accounts for more than 60 percent of gross domestic product in Saudi Arabia and Kuwait, and a lower 29 percent in the UAE.
Earlier this year, IMF Managing Director Christine Lagarde said the Gulf countries may have to raise corporate taxes.
The price of oil (U.S. crude) currently trades at around 46 dollars a barrel, down from 110 dollars a barrel in mid-2014, partly due to the rise of the shale oil sector in North America and the comeback of post-sanctions Iran on the global oil market.
