Gulf governments responded quickly and decisively to the shock of the pandemic with lockdowns among the toughest in the world, according to the Oxford Stringency Index, and as cases dropped, only the UAE has suffered a significant resurgence so far.
Although economic policies have eased to support businesses and households, with central banks cutting interest rates, liquidity provided to banks, and an encouragement to defer loan payments for borrowers, fiscal policy has played an important, but lesser role.
With the loss of oil revenues putting a strain on public finances and with many people employed in public sector jobs, there was less need for a countercyclical fiscal policy response than elsewhere. Nonetheless, tax payments were deferred, funds reallocated to health spending, and targeted support provided for households through income and employment protection programs.
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