The Gulf Cooperation Council (GCC) region is no stranger to financial challenges—fluctuating oil revenues, rising debt levels, and economic diversification efforts have made effective debt management a top priority. As of 2025, GCC countries have been taking strategic steps to ensure financial stability and sustainable growth. In this guide, we’ll explore proven strategies that businesses and governments in the GCC can adopt to navigate these financial complexities.

1. Fiscal Resilience and the Current Economic Landscape

Despite declining oil revenues, GCC countries have maintained a stable fiscal outlook with public debt expected to hover around 28% of GDP in 2025. This is largely due to prudent fiscal management and a focused push toward economic diversification. The non-oil sectors have shown promising growth, with rates projected at 4.3% in 2023 and continuing into 2025. For businesses, this diversification presents a pathway to mitigate risks associated with oil price volatility.

Key Insight: For corporations and SMEs, aligning investment strategies with the non-oil sector’s growth—such as renewable energy, tourism, and technology—can provide a more stable revenue stream.

2. Strategic Borrowing: Turning Debt into Opportunity

In 2024, GCC countries issued over US$120 billion in debt, with projections suggesting this could reach US$1 trillion by the end of 2025. However, this isn’t just about plugging budget deficits—it’s a strategic move to finance infrastructure and diversification projects. By accessing international debt markets, GCC nations are securing funding at competitive rates, enabling long-term investments that support economic stability.

Pro Tip: Businesses can leverage similar strategies by refinancing high-cost debt or tapping into international capital markets to fund growth initiatives, particularly in non-oil sectors.

3. Proven Strategies for Debt Restructuring

1. Fiscal Consolidation:

GCC governments are expanding their non-oil revenue through measures like Value Added Tax (VAT) and broader tax reforms. This approach helps stabilize finances without over-relying on oil revenues. For businesses, focusing on cost management and revenue diversification can mirror this strategy, ensuring financial resilience.

2. Public Financial Management:

Countries like Saudi Arabia have adopted international accounting standards, improving transparency and investor confidence. For corporations and SMEs, adopting global financial reporting standards can simplify debt management and attract investment.

3. Economic Diversification:

Investments in renewable energy, technology, and tourism are helping GCC nations reduce their reliance on oil. For businesses, this presents an opportunity to align with government-backed sectors and access financing and tax incentives aimed at promoting diversification.

Actionable Tip: Explore financing options tied to these sectors, such as green bonds for renewable energy projects or subsidized loans for technology investments.

4. Challenges on the Horizon: Geopolitical Tensions and Interest Rates

Geopolitical Tensions:

Uncertainty due to regional trade tensions and shifting alliances poses a risk to investor confidence. Businesses must develop contingency plans and diversify supply chains to mitigate these risks.

Interest Rate Fluctuations:

With global interest rates remaining volatile, GCC countries must carefully manage borrowing costs. For businesses, locking in fixed-rate loans and exploring interest rate hedging can provide stability in an uncertain environment.

Conclusion: Charting a Path to Stability

Navigating financial challenges in the GCC requires a strategic approach to debt restructuring, diversification, and risk management. By adopting proven strategies like fiscal consolidation, international financial standards, and targeted investments, businesses can not only survive but thrive in this evolving landscape.

Looking for expert financial guidance to navigate the GCC market?

Connect with Lion Muscat Services (LMS) for tailored financial advisory and debt management solutions designed to support your growth and stability.