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With an absent sultan and oil hovering around $60/bbl, Oman’s economic future is up in the air. Economic uncertainty is all the more challenging due to structural shortcomings which, despite decades of planning, remain obstinately in place; if anything, they have worsened over the past three years. Political questions over who will replace Sultan Qaboos Bin Said Al-Said – who has been in Germany, where he is understood to be having medical treatment for cancer, for almost eight months – have only ramped up financial jitters.

Governor of the Saudi Arabian Monetary Agency (SAMA) Fahad Al-Mubarak said Saudi Arabia needs to reform energy subsidies, in a speech published on the bank’s website on 8 February. While he did not outline any specific plans, Al-Mubarak said the subsidies “should be changed in a gradual and elaborated manner, to ensure that subsidies continue to target low and medium-income segments of the community, taking into account the social impacts of any change”.

When King Salman Bin Abdelaziz came to power in Saudi Arabia, he wasted little time in taking some expensive decisions (GSN 986/1). Along with a two-month salary bonus for state employees came handouts to students and sports clubs, and other measures. In all, the spending spree is estimated by ratings agency Standard & Poor’s (S&P) to have cost some SR110bn ($29bn). Such gestures are a traditional way for Gulf rulers to buy loyalty and suppress dissent, but their ability to continue with this approach is being tested by the ongoing slump in oil prices. Across the region, governments are facing sharp falls in revenues this year.

Iraq’s parliament approved a 2015 budget worth ID119trn ($105bn) on 29 January, predicting an ID25trn deficit, after revising down the expected price of oil to $56/bbl from $70/bbl in a previous draft. The passing of the budget represents a significant success for Prime Minister Haider Al-Abadi, not least because it seals an agreement between the Kurdish Regional Government (KRG) and Baghdad over how to export oil and share revenues, at least in the immediate future.

The Iraqi federal government and the Kurdistan Regional Government (KRG) announced a draft agreement on sharing oil revenues on 2 December, following two days of negotiations between federal Prime Minister Haider Al-Abadi and KRG Prime Minister Nechirvan Barzani. The deal, which builds on a temporary agreement signed in November, still needs to be approved by parliament and written into the 2015 budget. Presuming it is, the KRG will supply 250,000 b/d for export through the federal State Oil Marketing Organisation (SOMO) in return for a resumption of monthly payments of the KRG’s 17% slice of the budget.

It appears that Iraq will not pass a budget for 2014. While a draft was passed in January, the legislative process quickly broke down due to a dispute related to Kurdish oil exports, and never resumed as the nation become engulfed in a second Sunni insurgency and Prime Minister Haider Al-Abadi struggled to form a new government. The government is now expected to simply declare its revenues and expenses by the end of the year; should Baghdad and the Kurdistan Regional Government (KRG) reach a revenue-sharing agreement, it would be wrapped into the budget for 2015.

A majority of Saudi Arabia’s ruling elite has apparently retained a glacial calm amid global uncertainty as to how and why crude prices have been allowed to slump. The oil price has fallen by over one-third in H2 2014 – to a five-year low of just under $66/bbl for January delivery Brent at the time of writing – in events that have further loosened what was left of the Organisation of the Petroleum Exporting Countries (Opec) control of world oil markets. Saudi leaders and their allies – led by the three other Gulf Co-operation Council (GCC) Opec members, the UAE, Kuwait and (in recognition of recent moves towards rapprochement) Qatar – have focused on traditional concerns, such as maintaining market share.

As elections scheduled for 22 November approach, the kingdom of Bahrain remains bitterly divided. The main opposition parties confirmed on 11 October that they would boycott the polls, a decision that was not unexpected but which scuppers any hopes that the election might reinforce the government narrative that Bahrain is stable and on a path of economic recovery.While the boycott will be viewed as a setback by Crown Prince Salman Bin Hamad, who has been leading attempts to restart dialogue, others in the royal family will use the decision as further proof that the opposition is obstructionist.

When it comes to Gulf Co-operation Council (GCC) subsidy regimes in need of reform, Kuwait appears to be in most need. All residents, including foreigners, benefit from subsidised petrol, cheap electricity and water, while Kuwaiti nationals get extra support for housing and food. Electricity prices have not changed since 1966, at KD0.002 (2 fils – $0.007)/kWh.

Saudi Arabia’s Electricity and Cogeneration Regulatory Authority (ECRA) released its annual fiscal review on 1 July. Hidden inside the lengthy report was a startling figure: in 2012-13, Saudi government support to the Saudi Electricity Company alone was worth around $40bn, compared to an overall subsidy bill (electricity and gasoline) of roughly $13.3bn in 2010.

Sources in Sanaa tell GSN that Yemen is attempting to draft an economic reform package before the upcoming Friends of Yemen meeting in London on 29 April. President Abd-Rabbu Mansour Hadi travelled to Kuwait for the Arab League summit in March, accompanied by the minister for planning and international co-operation Mohammed Saeed Al-Saadi, in the hope of pushing forward talks on financial assistance already pledged to the cash-strapped government. Gulf neighbours have said they want to see a faster pace of reform, if they are to release the rest of funds pledged since 2012, and consider further aid.

The International Monetary Fund (IMF) has released its preliminary findings following an Article IV consultation with Qatar, conducted on 19-20 February. While GDP growth slowed from 13% in 2011 to 6.2% in 2012, largely due to the self-imposed moratorium on additional hydrocarbon production from the North Field, the IMF projects it remained around 6% in 2013, driven by 10% expansion in non-hydrocarbons – which the IMF says now account for almost half of the economy – especially construction, transport, communications and finance.

The UAE has pledged billions of dollars to support Egypt’s new administration, which overthrew the Muslim Brotherhood leadership in July. Reports suggest the UAE has since given Egypt $4.9bn, plus a $2bn deposit in the central bank. On 9 March, Arabtec Holding, Dubai’s largest listed construction firm, agreed with the Egyptian army to build a million houses in Egypt in a project worth more than $40bn.

The International Monetary Fund (IMF) has issued a downbeat assessment of Iran’s economy and urged wide-ranging reforms, following a visit to Iran earlier this year. A full report is due to be published in late March, but the fund’s interim review talked of “large shocks and weak macroeconomic management” in recent years. The IMF predicts the Iranian economy will shrink by 1%-2% in the current financial year, which ends on 20 March. It also points out that unemployment and inflation are high and some ambitious social programmes are “inadequately funded”.

There is a growing expectation that, within a year or two, the Saudi government will be spending more than it earns. In a research note published in January, Saudi Arabia’s Samba Financial Group became the latest to make the prediction, saying that, in its view, a fiscal deficit was likely as early as 2015. Others have also added their voices to the chorus. Riyadh-based Jadwa Investment thinks it will happen by 2016, and at least one major international bank predicts a deficit “within two to three years”.