Conference Paper
Covid-19 and Civil Service Reform in the GCC: New Urgency and Incentives for Tackling an Old Problem
Date
March, 2021
Topic
H. Public Economics
This paper fits under theme three of the conference: improving government efficiency as a service provider and regulator in an increasingly virtual economy. GCC countries have long struggled with the challenge of large and under-performing public sectors, which complicate efforts towards economic diversification. The wage bill in many countries poses a long-term threat to fiscal sustainability. Generous pay and benefits, combined with reduced working hours and limited enforcement of workplace discipline, has meant that the public sector is the employer of first resort for many GCC nationals—complicating efforts to diversify labor markets and encourage greater private sector employment.
While these problems have been long-standing, they have become more acute under the burden of the Covid-19 pandemic and the decline (and subsequent partial rebound) of hydrocarbon prices. The IMF anticipates that GDP throughout the MENA region is expected to drop by 4.7 percent in 2020. Declines in the GCC are expected to be even higher, on the order of 7.1 percent, with an average 10.5 percent deterioration in the overall fiscal balance of GCC countries. The Fund projects some rebound in 2021, although progress will be uneven. (Saudi Arabia is projected to grow at around 3.1 percent; Qatar at 2.5 percent and Bahrain at 2.1 percent, but progress in other parts of the Gulf will be anemic and Oman’s GDP is actually projected to decline by .5 percent.). Oil prices are expected to remain below $60 per barrel through 2021—a sum that is below the fiscal break-even price for all GCC countries save Qatar.
Authors
Robert Beschel
Nonresident Senior Fellow, Brookings Center Doha
Authors
Paul Dyer
Development Economist