Les Pays du Golfe Face à la Crise de la Dette

Publié le: 28/02/24

Par: Ishac Diwan, 

Unveiling 6 Key Features

In February 2024, Egypt and the UAE signed a $35 billion investment deal to develop the Mediterranean coast of Ras Al Hekma. The project will be partly financed by existing Emirati deposits in the Egyptian Central Bank and is intended to help alleviate part of Egypt's foreign debt and economic challenges due to its acute debt crisis. The announcement has sparked renewed debates about the role of Gulf states in rescuing neighbouring countries' economies. Specifically, it highlights a new trend of Gulf countries using their financial packages to secure favourable investment opportunities in recipient countries.


Visiting Fellow, Middle East and North Africa Program, European Council on Foreign Relations (ECFR)

Senior Fellow for Middle East Policy, The International Institute for Strategic Studies, IISS-Middle East

Often described as emerging donors, the Gulf states – namely Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar – have, in fact, a long-standing history of bailing out countries in economic and financial distress and have been serving as lenders of last resort since the 1960s. Recently, their role as donors has become even more prominent due to the COVID-19 pandemic and the Russian invasion of Ukraine. Given their large donor footprint, the Gulf states have gained broader global recognition for their contribution to the international economic landscape. Saudi Arabia now sits on the Global Sovereign Debt Roundtable jointly convened by the IMF and World Bank and is widely recognised as a key non-Western donor in the global sovereign debt arena, alongside China.

For a long time, there was little information available on the lending practices of Gulf states. This was due to a lack of transparency and consistent reporting. However, our recent study, published by the International Institute for Strategic Studies, Gulf Bailout Diplomacy: Aid as Economic Statecraft in a Turbulent Region, sheds light on the politics and modalities of Gulf bailout aid. This type of aid refers to the provision of budgetary or balance-of-payments support to countries facing economic or financial crises.

Photo by <a href="https://unsplash.com/@safwan_mahmud?utm_content=creditCopyText&utm_medium=referral&utm_source=unsplash">Safwan Mahmud</a> on <a href="https://unsplash.com/photos/airliner-photography-C7jl1peS-jc?utm_content=creditCopyText&utm_medium=referral&utm_source=unsplash">Unsplash</a>
Photo by Safwan Mahmud on Unsplash

According to the study, between 1963 and 2022, the Gulf states disbursed an estimated $363 billion (constant 2020 USD) to 22 countries in the wider MENA region and beyond. This aid not only helps bring stability in their immediate surroundings but is also used as a way to grow their influence and shape political and security outcomes in the wider MENA region.

In recent decades, the Gulf states have developed unique lending practices that set them apart from other bilateral lenders and multilateral institutions. It is crucial for policymakers to understanding how the Gulf states operate, especially given the increasing challenges of debt sustainability in the MENA region. Cooperation between various bilateral and multilateral lenders will be necessary to address these challenges effectively.


  • In this study, financial bailout aid refers to the practice of bailing out countries facing acute economic or political crisis through direct budgetary support. Unlike humanitarian or development aid, bailout aid is not tied to specific sectors or projects, but flows directly into state coffers. It includes direct budget support, central bank deposits, oil and gas in-kind assistance or credit facilities, debt write-offs, credit swaps and sovereign bond purchases.
  • To piece together the data on Gulf bailout flows, we consulted various official and unofficial sources. These sources include: (i) Official government sources in donor or recipient states, including reports or announcements made by central banks, finance ministries, foreign ministries or national-development agencies. (ii) International financial institutions (IFFs), notably IMF reports, the OECD Creditor Reporting System and the World Bank’s International Debt Statistics database.
  • We also relied on press and media reports, and on the data collected by AidData for Saudi Arabia and Qatar, and the American Enterprise Institute’s ‘Gulf Financial Aid and Direct Investment Tracker’.
  • Data collection was supplemented by interviews with donor agencies and recipient states’ select ministries. These interviews were held on an off-the-record basis, and are therefore not cited in the report, despite having shaped its analysis.

1. The Gulf states use bailout aid as a political tool to achieve geostrategic objectives.

Unlike humanitarian or development aid, Gulf bailout aid tends to serve a political purpose. Decisions to allocate bailout aid are usually taken by Gulf leaders themselves, as they enjoy almost full executive authority over their countries’ significant financial reserves. As a result, the Gulf states can mobilise bailout packages quickly and act decisively in moments of crisis. Moreover, the Gulf states are often able to provide colossal bailout packages relative to the size of their recipients’ economies. Their unique ability to intervene rapidly and at scale provides them with considerable political leverage over vulnerable recipients who are under pressure to seek financial assistance during crises.

Figure 1 - Selected Gulf bailout-aid recipients’ shares of disbursements by decade, 1963–2022
Figure 1 - Selected Gulf bailout-aid recipients’ shares of disbursements by decade, 1963–2022

The Gulf states can also use their political leverage coercively over vulnerable recipients by threatening to withhold aid or recall maturing deposits to extract political or economic concessions.

Historically, Gulf bailout aid has been linked to geopolitical and energy shocks. For example, during the 1980-88 Iran-Iraq War,  the Gulf states bailed out Iraq because they perceived post-1979 Iran as a threat to their own security. Then, the Gulf states bailed out Egypt, Pakistan, and Morocco in 1991 as a reward for their help in expelling Iraq militarily from Kuwait. During the Arab Spring, Saudi Arabia, the UAE, and Qatar used bailout packages to compete for influence with one another as with other regional rivals, notably Iran and Turkey.

Figure 2 - Donors’ shares of Gulf bailout aid before and after the Arab Spring, 1963–2022
Figure 2 - Donors’ shares of Gulf bailout aid before and after the Arab Spring, 1963–2022

2. Gulf bailout aid typically takes the form of central bank deposits, unspecific loans, and oil and gas assistance, though the Gulf states have widened their toolkit in recent years.

In volume, the Arab Gulf states disburse most of their bailout aid as central bank deposits, unspecified loans, and oil and gas assistance, which can take the form of oil import credits or the physical delivery of fuel grants particularly in conflict zones. Since the 2011 Arab Spring, the Gulf states have heavily relied on central bank deposits, using them to stabilise sinking currencies and allowing recipients to service external debt and finance imports even when their foreign currency recipients are dwindling, with Egypt, Pakistan, and Turkey as prime examples.

More recently, the Gulf states have increasingly turned to currency swap agreements as a financing instrument. Besides these, they also employ other measures such as budgetary grants, debt write-offs, purchases of government bonds, and loan guarantees to support partners in financial distress.

3. Gulf bailout loans tend to be concessional.

Due to their political nature, Gulf bailout packages often tend to be secretive, implying that key parameters including loans’ repayment terms, interest rates and maturity periods, are not publicly disclosed. However, in the handful of cases where such information is available, Gulf loans appear to be mostly concessional as interest rates are set below market levels. Central bank deposits are usually rolled over for many years or even decades. In some cases, the Gulf states converted short-term deposits into long-term loans or even grants, though it remains unclear what percentage of Gulf loans and deposits are ultimately repaid by their beneficiaries. Compared to Chinese financing of infrastructure projects which is usually priced at market rates, Gulf lending appears to be more concessional

4. Oil prices are linked to Gulf bailouts in various ways but do not determine them.

Although Gulf bailout aid broadly follows the movement of oil prices, it is not completely determined by it. The sharp increase in oil prices and revenues that followed the 1973 oil crisis kicked off the first wave of large-scale bailout packages in the 1970s and 1980s.

Whilst high oil prices flood Gulf coffers with financial revenues, they also increase the risk of current account deficits for net oil importers in the Middle East region. This makes them more susceptible to economic instability and puts them in greater need of Gulf aid. During periods of oil price upswings such as the 1973 oil crisis, the 1990-1 Gulf Crisis, or in the aftermath of Russia’s 2022 invasion in Ukraine, the Gulf states hiked up transfers of bailout aid partly to offset the impact on net oil importers in the region. In such situations, Gulf bailout aid operates as a solidarity mechanism, transferring wealth from net oil exporters to net oil importers in the region.

Nevertheless, because the Gulf states enjoy easy access to international capital markets and can tap into their own reserves when needed, they are able to provide bailout packages to advance core political or security objectives even when oil prices are low. As a result, the Gulf states maintained high levels of bailout assistance despite drops in oil prices during the Iran–Iraq War and the post-2011 Arab Spring period.

However, expectations of declining global oil consumption in the long-term due to the energy transition may already have dampened the ‘Gulf states’ political appetite for expensive bailouts. If oil prices drop on a protracted basis in the future, then the Gulf states may face limitations on their fiscal capacity to provide bailout packages.

Figure 3 - Average annual oil prices and Gulf bailout-aid disbursements, 1963–2022
Figure 3 - Average annual oil prices and Gulf bailout-aid disbursements, 1963–2022

5. The Gulf states have signalled a shift away from unconditional aid but are often finding it difficult to stay the course.

Unlike the IMF, the Gulf states do not usually condition bailouts on economic or governance reforms. Instead, they traditionally follow a policy of non-interference, supporting partners without imposing strict policy guidelines. As a result, Gulf bailout aid has sometimes been used as an alternative source of funding to the IMF or Paris Club by recipient countries who did not want to submit themselves to structural adjustment programmes.

In recent years however, the Gulf states have voiced their frustration with longstanding aid beneficiaries who have consistently failed to implement reforms. During the 2023 World Economic Forum, Saudi Finance Minister Mohammed al-Jadaan declared that the era of unconditional aid was over. ‘We used to give direct grants and deposits without strings attached, and we are changing that’, he stated, adding that Saudi Arabia was ‘working with multilateral institutions to actually say, “We need to see reforms”’. The Qatari finance minister made a similar statement two months later, stating that the Gulf states were moving towards conditioning aid and providing investments instead.

The Gulf states have been experiencing frustration with their partners, leading them to a gradual shift away from their policy of providing unconditional aid. Bailout packages to longstanding beneficiaries have become increasingly conditional on complying with IMF reforms. For instance, when Pakistan needed a bailout in 2008, the Gulf states refused to provide aid without the IMF’s involvement, even though Pakistan was reluctant to submit to IMF conditionality. Similarly, the Gulf states have coordinated their aid to Egypt more closely with the IMF since 2016, requiring compliance with IMF obligations for the disbursement of their aid. In recent years, the Gulf states have also tasked the Arab Monetary Fund – where the Gulf states’ contributions make up 37% of the fund’s capital (2022) – with monitoring loan programmes provided to Bahrain and Yemen and reporting on their compliance with agreed reforms.

Nevertheless, the Gulf states are finding it difficult to implement a complete shift that links financial support to reforms. Geopolitical pressures and the twin shocks of the COVID-19 pandemic and the Russia-Ukraine War have complicated this shift towards conditional foreign aid. Since Minister Al Jaddan’s speech in January 2023, new packages have been announced to Tunisia, Yemen, Argentina, and Turkey with no hint of economic or governance reforms being undertaken in return.

Figure 4 - Selected recipients of Gulf and IMF bailout aid, 1974–2022
Figure 4 - Selected recipients of Gulf and IMF bailout aid, 1974–2022

6. The Gulf states are leveraging their donor status to secure preferential access to privatised state-owned assets.

In recent years, the Gulf states have increasingly adopted a more transactional approach to their bailout diplomacy, demanding tangible commercial concessions in exchange for their financial support. Under the IMF loan programme, Egypt is expected to raise billions of dollars in revenue in sales of state-owned assets. The Gulf states have benefited from their donor status vis-à-vis Egypt to secure a right of first refusal for the purchase of privatised Egyptian state assets. As a result, Saudi and Emirati sovereign wealth funds and state-owned enterprises have acquired stakes in a number of Egyptian companies operating in the ports, petrochemicals, financial, and retail sectors. Gulf officials typically defend the practice by stating that these investments are ‘crowding out’ the Egyptian military from the economy while ‘crowding in’ the private sector. Given their appetite for investments, the Gulf states could begin to make use of their donor status to negotiate preferential access to state-owned assets in other jurisdictions beyond Egypt.


This trend highlights the evolving nature of Gulf bailout aid, which not only aims to address immediate economic challenges but also seeks strategic investments and long-term influence. As the global economic landscape continues to evolve, understanding the dynamics of Gulf bailout aid and its implications for recipient countries and global geopolitics will remain crucial for policymakers and international stakeholders.