05 July, 2016
The Gulf Cooperation Council (GCC) countries1 are in a fiscal crunch. Even if the GCC member states can grow non oil revenues by 10 percent annually over the rest of this decade and the average price per barrel of oil returns to US$50, their budgets will still need to be reduced by approximately $100 billion (7 percent of GCC GDP) on an annual basis to achieve fiscal balance.
All GCC governments have announced spending cuts, but conventional strategies, such as across the board or narrowly focused cuts, could do irreparable harm to their economic and social development. Instead, they need a more effective approach — one that enables them to cut costs and grow stronger simultaneously. This approach, which Strategy& developed for the private sector and customized for government, is called Fit for Service.
Fit for Service achieves substantial and sustainable reductions in spending, while bolstering investment in the government services and initiatives that are essential to the long term security and well being of governments’ constituents. It involves four actions: articulating strategy; transforming the existing cost structure of government services; building the necessary capabilities; and reorganizing the government’s operating model for high performance. There are two enablers of these actions. The first is digital, which drives the digital transformation of government. The second is the development of the talent needed within government and the national economy at large along with the creation of a change friendly culture that can support and nurture stakeholders as they undertake transformational initiatives.
Fit for Service initiatives are difficult but worth the effort because the leaders of the GCC member states cannot simply cut costs by conventional means if they are to transform the cost base of their governments and create a more sustainable fiscal future.
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