DUBAI: Fuel subsidy reforms by Gulf states will help reduce pressure on budgets but are not enough to offset deficits resulting from low oil prices, ratings agency Moody`s said.

Savings from increased fuel prices in the six Gulf nations will average 0.5 per cent of GDP around $7 billion this year against an estimated deficit of12.4pc of GDP, it said.

`Recent moves to reform subsidies signal political willingness to address the damaging effect of low oil prices on budgets,` said Moody`s analyst Mathias Angonin.

`However, they fall short of the scale of economic and fiscal reform required to achieve budget balance,` he said.All the six Gulf Cooperation Council (GCC) states, which depend heavily on oil income, have reduced generous fuel, electricity and other subsidies to cut spending in the face of falling revenues.

TheGCCgroupsenergy-richBahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. All of them posted a budget deficit last year.-AFP