Gulf Arab states issued record debt last year, in large part after the World Health Organization declared the outbreak of the coronavirus a pandemic just over a year ago, on March 11, 2020. 

Levels of indebtedness matter, but so does the question of the allocation of resources. Did the six Gulf Cooperation Council (GCC) member states use the more than $400 billion borrowed since the 2014 oil prices crash to help build more resilient economies? 

In-depth data is scarce, but funds have been primarily used to defend local currencies and plug budget deficits. The Gulf’s fiscal shortfalls result from a combined significant decline in oil export revenues and unchanged large public sector wage bills that still account for the lion of public expenditures — about 55% of Saudi Arabia’s estimated spendings in 2021.

This implies a sizable portion of money borrowed by GCC governments for the past seven years has been indirectly channeled to Gulf nationals who, for the vast majority, are employed as civil servants. Bahrain and Saudi Arabia’s economic responses to the coronavirus crisis also included paying part of private sector salaries for citizens.