Virtue borne out of necessity?
ME PoV Spring 2015 issue
The sharper focus on public sector spending across the region–brought about by reduced oil prices–may provide the stimulus needed to drive change in major procurements and, in the longer-term, support governments in broadening the regional economic base and securing a range of other benefits.
The scale and speed of the change in the oil price has had a clear influence on the fiscal landscape for governments across the region. While the level and immediacy of the impact varies, many have signposted a recasting–or rethinking–of major investment programs in infrastructure.
Reducing the capital allocated for essential projects carries risk. Lack of investment leaves unmet the need for economic infrastructure to create jobs that would in turn help steer economies away from a reliance on natural resources. In addition, real and unmet demand in areas of social infrastructure such as housing, health and education goes unaddressed. Tightening budgets generally across public services has the potential to exacerbate another challenge commonly experienced in the region, that of the effective whole-life maintenance of existing public assets.