Measuring the Performance of Fiscal Reforms: The Case of the GCC

Public spending has raised the welfare of citizens in the Gulf Cooperation Countries (GCC) significantly over the period 1960–2015, particularly as measured in raised average life expectancy and lowered infant mortality rates. Fiscal policy in oil-producing countries is pro-cyclical, producing sharp fluctuations in the business cycle, but reliance on oil revenue provides challenges for future improvements in development. For the first time in decades all the GCC economies are going through major economic reforms aimed at increasing efficiency while enhancing the economic welfare of the residents. GCC countries are reforming subsidies, particularly for energy, diversifying tax revenues by introducing value-added taxes and privatizing state enterprises in the provision of electricity and water.