Global consultancy Oliver Wyman said Sunday that in the wake of the oil slump, the Gulf Arab countries could create 100 billion U.S. dollars in additional GDP value if privatizing 25 percent of state-controlled firms and assets. In its report titled "Creating a sustainable privatization programme in the GCC (Gulf Arab Co-operation Council)," Oliver Wyman said a sale of 25 percent of government assets, such as state-owned ports, airliners or companies, had the potential of shifting 300,000 public sector jobs of GCC nationals to the private sector and "it could reduce GCC budgets by five percent."
The latter aspect would mean a partial solution to the challenge of lower oil prices, said the New York-based consultancy. The "black gold" has been trading around 45 dollars per barrel, down from 110 dollar in June 2014.
Diversification is critical for many GCC countries which are overly reliant upon the sale of oil for government revenues, it added. Jeff Youssef, Partner at Oliver Wyman and author of the report, said "Privatisation, when well executed, can bring clear benefits to the economy in terms of economic growth, higher employment, and an improved fiscal balance for the government."
"Shifting assets to the private sector can reduce government costs by removing inefficient and unprofitable companies from a state's balance sheet. While often viewed purely in fiscal terms, privatisation can also provide important economic and social improvements." The report highlights that since the 1980s, there has been a worldwide trend toward privatisation. However, GCC countries have remained largely absent from the privatisation trends initiated in emerging economies.
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