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Infrastructure project spending to soar in GCC nations: report
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21:03, September 28, 2009

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Infrastructure spending of member countries of the Gulf Cooperation Council (GCC) is expected to reach 205 billion U.S. dollars by 2013, local newspaper Gulf News reported Monday.

Although funding has emerged a big challenge in the context of the global credit crisis, economists expect GCC governments to support most infrastructure projects and bond issues will be a major source of funding for many of the projects, said the report, quoting the latest estimates by Standard Chartered Bank.

Saudi Arabia alone accounts for more than 50 percent of regional infrastructure spending with 105 billion dollars in investments planned in projects such as hospitals, roads, railways and airports, according to the report.

Power and water projects in GCC nations are largely carried out by quasi-government entities, and these projects are seen as a high priority, as the additional capacity is urgently required to address demands of the region's growing population, the newspaper said.

Annual GCC electricity demand is expected to grow 10 percent and desalination demand 8 percent until 2015. GCC countries plan to spend nearly 70 billion dollars in the next four years to expand present facilities and create new capacity.

Financing for many of the large-scale projects will continue to be challenged by tighter global liquidity conditions. The Middle East was the world's largest project finance market only a couple of years ago. However, lending decelerated sharply due to the global financial crisis.

Analysts and bankers predict a slow recovery in the project finance market during the next two quarters.

The GCC, a regional trade bloc created on May 25, 1981, comprises six Gulf Arab states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Source:Xinhua



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