Qatar’s economy ‘stronger than before’, cbank governor says

Doha considers selling dollar bonds for benchmark purposes only

DOHA, Dec 10, (RTRS): Qatar’s economy has shown resilience in the face of a boycott imposed by some Arab countries, Qatar’s central bank governor said on Monday.

Qatar became locked in a diplomatic dispute with Saudi Arabia, the United Arab Emirates, Egypt and Bahrain in June last year.

“We have surmounted this crisis, we’ve become even stronger than before,” Qatar central bank governor Sheikh Abdullah bin Saud al-Thani said at a financial conference in Doha.

He said Qatar’s real GDP grew by 2.5 percent in the first half of 2018.

Qatar’s international reserves and foreign currency liquidity, which had dropped by 20 percent in the first few months after the boycott, are now back to normal, and amounted to $46.5 billion at the end of September, he said.

Qatar’s GDP growth is projected to rise to 2.4 pct in 2018 from 1.6 percent in 2017 on the back of higher energy prices, the International Monetary Fund said in November.

The fund forecast a further rise in GDP growth to 3.1 pct for 2019.

The governor said total reserves at commercial banks in Qatar had grown by 5 percent in the first nine months of 2018, a sign that preventive measures taken by Qatari banks have improved the resilience of the banking system, he said.

Meanwhile, Qatar does not need to raise debt through international bonds next year because its budget forecasts an economic surplus, but it might issue dollar debt to provide a pricing benchmark to government-related entities that plan to sell bonds, a finance ministry official said.

Qatar raised $12 billion in a jumbo bond issue in April, one of the largest debt placements by an emergingmarket sovereign this year, marking a successful comeback to international debt markets despite a rift with its Gulf neighbors.

Doha has been locked in a diplomatic dispute with Saudi Arabia, the United Arab Emirates, Egypt and Bahrain since June of last year. They all severed diplomatic and transport ties with Qatar, accusing it of supporting terrorism, a charge Doha denies.

The world’s largest exporter of liquefied natural gas has largely overcome the economic impact of the boycott, also thanks to a rise in energy prices this year. Its finance minister reiterated during an international conference in Doha this week that the country’s national budget for 2019 forecasts a surplus.

Because of this, Qatar has no plan to raise debt finance internationally next year, Ali Mohamed Al Sowaidi, director of credit policies at the ministry of finance, told Reuters in an interview.

“If we go to the market - that’s if we go, which is unlikely - it might be for a smaller amount, and that’s to give a benchmark for government-related entities, if they want to go to the market,” he said.

The cost of debt issued by government-related entities - which in Qatar include corporations like Qatar Airways and Qatar National Bank - is generally calculated using the government’s debt curve as a pricing benchmark.

Qatar planned to raise $8 billion with its last international bond. But it got orders for around $52 billion, so it decided to increase the size of the issue by $4 billion, said Praveen Arumugam, financial consultant, credit policies and debt department.

The size of next year’s potential debt sale has not been established and will depend on market conditions, he added.

Last week, rating agency S&P revised its outlook on Qatar to stable from negative, citing macroeconomic resilience and expectations that Qatar will continue to mitigate the economic and financial fallout of the boycott.