Qatar must urgently consider subsidy reforms: Minister
DOHA: Qatar must urgently consider reforms to its subsidy and tax systems, a senior official said yesterday in a fresh sign that the rich Gulf energy exporting states may make radical changes to cope with low oil and gas prices. Saleh Mohammed Al-Nabit, Qatar’s Minister of Development Planning and Statistics, said in a speech that pressure on state finances meant the government had to be more disciplined in spending on all programs and projects.
“It has also become an urgent need to consider issues such as the rationalisation of support and providing it to target groups, development of the tax system, and supporting the revenue side of the budget,” Nabit said.
Fuel and food subsidies are part of a lavish social welfare system. Nabit’s remarks suggested subsidies might in future be provided to a smaller group of people, perhaps only Qatari citizens or lower-income people rather than the entire population, which includes many foreign workers.
Nabit did not elaborate on possible tax reforms. Among other measures, Qatar has been discussing with neighboring countries the introduction of a regional value-added tax. Qatar, the world’s biggest liquefied natural gas exporter, is one of the Gulf’s richest countries and is in no financial danger. But the value of its energy exports has almost halved this year. In a report in June, the ministry predicted the government would next year run its first budget deficit in 15 years, of about 4.9 percent of gross domestic product. But Qatar’s emir said last week that the state budget for 2016 would avoid a big deficit, which implied that spending may become more conservative than originally planned. Nabit said yesterday that despite lower energy prices, the government would press ahead with tens of billions of dollars worth of infrastructure and social welfare projects.
But he acknowledged that some projects might be delayed because of logistical difficulties, supply bottlenecks and high costs. International Monetary Fund chief Christine Lagarde visited Doha on Sunday as part of a tour of the Gulf Arab oil states, during which she is urging them to make tax and spending reforms. On Sunday, she said a regional value-added tax should not be delayed further. — Reuters