The notion of economic reforms occurring on the back of a sustained low for oil prices is slowly — but steadily — gaining momentum across the Gulf countries. Most of the member states have assumed steps designed at re-engineering the subsidy programme, notably those on petroleum products.

The UAE took the lead by forming a committee to review, supervise and set prices at the retail level every month. The committee started its work by opting for lowering prices for several consecutive months in sync with the global level. The model is a notable one, as it takes into account what is prevailing internationally and makes the necessary adjustments locally.

Not surprisingly, some GCC countries are faster than others in implementing reforms. Kuwait lags behind others, ostensibly due to the country’s political structure, in turn requiring a compromise between the appointed and elected entities, respectively.

Understandably, the parliament members stress that any cuts in spending and other reform initiatives should not undermine the welfare of Kuwaiti nationals. In fact, there is the possibility of getting rid of the services of some foreign nationals working in the public sector as part of moves to cut spending. Foreign workers make up the majority of workers in the private sector and a tiny minority in public establishments.

Conversely, the authorities in Bahrain seem exceptionally serious about carrying out elaborate activities including raising prices for premium petrol by 60 per cent in a single step to $0.42. Also, starting in March, businesses and expatriates are subjected to a hike in utility charges.

Locals owning more than a single house would be required to pay the higher rates. On top of all these, officials have ended subsidy for red meat and chicken and undoubtedly more is to come.

Yet, in an appalling recent report, Moody’s suggested that fuel subsidy reforms could not turn budgetary shortage into a surplus in GCC countries. The rating agency argues that savings from increased fuel prices would be rather small, averaging a mere 0.5 per cent or so of GDP across GCC states in 2016.

This is not exceptionally surprising as fuel subsidy reform represents only one part of broader steps. Others include enhancing the collection for governmental services. In some GCC states, provision of new municipality services for instance is being linked to clearing arrears.

Furthermore, GCC countries are talking about collectively imposing a 5 per cent VAT by 2018 or certainly before 2019. The relatively long transitional period is meant to provide businesses and the general public an opportunity to adjust to the extraordinary move.

However, GCC states have all but rejected a call made by the IMF to introduce personal income tax. It is feared that such a move would undermine the competitiveness of GCC economies to entice investors.

It is fair to assume that Saudi Arabia, Oman and Bahrain would undertake additional steps designed to enhance revenues and curb spending due to rating challenges. Recently, S&P decided to downgrade sovereign ratings for the three countries by two notches — Saudi Arabia to AA-, Oman to BBB- and Bahrain to BB.

Needless to say, assumption of further steps would be essential in order to deal with the challenge of low oil prices, in turn vital for the well-being of GCC economies. Average prices have dropped by more than two-thirds between July 2014 and January 2016 with no end in sight.

Clearly, all roads are leading to economic reforms across the GCC and for good causes too.

The writer is a Member of Parliament in Bahrain.