GCC Government Debt Set to Rise 12.2% to $938 Billion in 2026

Government debt across the six Gulf Cooperation Council states is projected to reach $938 billion in 2026, a 12.2% increase on the $836 billion recorded a year earlier, based on the International Monetary Fund's October 2026 World Economic Outlook database.

The total conceals a wide spread. Bahrain carries the heaviest burden relative to the size of its economy at 162.85% of GDP. Kuwait sits at the opposite end at 26.57%. Ratios are forecast to climb in four of the six countries this year and to decline in the UAE and Oman.

A region-wide contraction

The debt figures land alongside a much weaker growth picture. The IMF's October 2026 Regional Economic Outlook for the Middle East and Central Asia has GCC economies contracting 4.8% in 2026, reversing growth of 4.5% in 2025, before a rebound of 9.1% the following year. The 2026 number sits 6.8 percentage points below the Fund's April estimate.

Kuwait is forecast to shrink fastest at 16.7%, followed by Qatar at 15.6% and Bahrain at 11.3%. The UAE and Saudi Arabia are put at 3.9% and 3.3% respectively. Oman is the outlier, expanding 4.1%.

The baseline scenario assumes disruption to energy production and trade persists through the first quarter of 2027, with flows through the Strait of Hormuz recovering gradually and conditions returning to normal by the end of that year.

Bahrain: debt larger than a year of output

Bahrain's ratio rises to 162.85% from 144.26%, an increase of 18.58 percentage points, and it remains the only Gulf economy where outstanding government debt exceeds annual GDP. The stock is estimated at $74.9 billion (BHD 28.18 billion), against $70.6 billion (BHD 26.56 billion) in 2025. Both sides of the ratio are moving the wrong way: the debt balance is higher and nominal GDP is projected to slip to about $46 billion from $49 billion. Growth is forecast at -11.3%.

The fiscal deficit is expected to narrow to 11.40% of GDP from 13.16%, though public finances stay under heavy pressure. In an assessment published in January 2026, the IMF called for further fiscal measures and structural reform, including higher revenues, more efficient subsidies and limits on off-budget spending, to set debt on a sustainable downward path.

Qatar: ratio climbs as output shrinks

Qatar's debt-to-GDP ratio is projected to reach 46.4%, up from 42.47%. Outstanding debt rises to roughly $94.2 billion (QAR 342.9 billion) from $91.5 billion (QAR 333.2 billion), while nominal GDP falls to $203 billion from $215.6 billion. Growth is forecast at -15.6%.

The October estimates show the deficit widening to 2.80% of GDP from 0.96%. Under the original 2026 budget, revenues were set at $54.7 billion (QAR 199 billion) against expenditure of $60.7 billion (QAR 220.8 billion), leaving a shortfall of $6 billion (QAR 21.8 billion). The Ministry of Finance said the gap would be covered with domestic and international debt instruments, depending on financing needs and market conditions. The plan assumed an average oil price of $55 a barrel and allocated $17.3 billion (QAR 62.8 billion) to major capital spending. These are budget estimates rather than final fiscal results.

Saudi Arabia: a wider deficit and a larger borrowing plan

Saudi Arabia's ratio reaches 35.44% from 31.81%, with debt at about $476.1 billion (SAR 1.785 trillion) against $405.1 billion (SAR 1.519 trillion) a year earlier. Growth is forecast at -3.3%.

The October data puts the deficit at roughly $87 billion (SAR 326.2 billion), equivalent to 6.48% of GDP, up from $73.9 billion (SAR 277 billion), or 5.80%, in 2025. That is a revision in the wrong direction. The Fund's July assessment had projected the deficit narrowing to 3.7% of GDP with debt held at 32.1%.

In January the government approved a borrowing plan covering $57.9 billion (SAR 217 billion) of financing needs, split between $44 billion (SAR 165 billion) for the deficit as estimated at the time and $13.9 billion (SAR 52 billion) to repay maturing principal. Refinancing replaces existing liabilities and does not necessarily raise net outstanding debt.

UAE: ratio falls even as borrowing rises

The UAE's ratio declines to 32.76% from 33.86%, even though the debt stock is expected to grow to about $216.5 billion (AED 795.2 billion) from $208.1 billion (AED 764.1 billion). Nominal GDP rising to $661 billion from $614.4 billion accounts for the difference. Growth is forecast at -3.9%.

The IMF expects a fiscal surplus of 1.52% of GDP, down from 3.95%, which leaves room for issuance to support capital market development and investment diversification as well as funding. The Ministry of Finance sold a combined $299.5 million (AED 1.1 billion) of dirham-denominated Treasury bonds and sukuk across two auctions in July, drawing bids totalling $1.32 billion (AED 4.83 billion). Both programmes are designed to build a dirham yield curve and deepen the domestic debt market.

In September the ministry announced the second issuance under its retail Treasury sukuk programme, targeting $13.6 million (AED 50 million) in five-year paper offering a 5.06% annual return, part of an effort to broaden the investor base.

Oman: debt and ratio both decline

Oman's ratio falls to 31.07% from 34.67%. The debt stock edges down to $37.7 billion (OMR 14.5 billion) from $37.9 billion (OMR 14.59 billion), while nominal GDP rises to $121.4 billion from $109.4 billion. The surplus is projected to widen to 5.95% of GDP from 0.57%, which supports the country's debt indicators. Oman is the only GCC economy expected to grow, at 4.1% against 2.4% in 2025.

Kuwait: lowest ratio, steepest climb

Kuwait keeps the lowest ratio in the bloc at 26.57%, but that is up from 14.65%, a rise of 11.92 percentage points. Outstanding debt is expected to reach about $39 billion (KWD 11.96 billion) from $23 billion (KWD 7.06 billion), while nominal GDP falls to $146.9 billion from $157.2 billion. Growth is forecast at -16.7%.

The borrowing follows the Financing and Liquidity Law passed in March 2025, which set a public debt ceiling of roughly $97 billion (KWD 30 billion) and allowed instruments with maturities of up to 50 years. The ceiling is a legal limit on borrowing, not the outstanding balance. In September 2026 the Ministry of Finance announced a government sukuk law, adding a Sharia-compliant instrument to sovereign funding and widening access to domestic and international investors.

Kuwait ran an actual deficit of $23 billion (KWD 7.14 billion) in the fiscal year ended March 2026, its final accounts show, after oil revenues fell 29.8%.