Qatar Cen­tral bank: $340bn in re­serves

Doha claims it can han­dle iso­la­tion Joint ven­ture with To­tal

Kuwait Times - - BUSINESS -

DUBAI: Qatar has $340 bil­lion in re­serves that could help the Gulf coun­try to weather the iso­la­tion by its pow­er­ful Arab neigh­bors, cen­tral bank gover­nor Sheikh Ab­dul­lah Bin Saoud Al-Thani said. “This is the cred­i­bil­ity of our sys­tem, we have enough cash to pre­serve any... kind of shock,” he told the CNBC news chan­nel in an in­ter­view pub­lished early yes­ter­day on its web­site.

Al-Thani said the cen­tral bank has $40 bil­lion in re­serves plus gold, while the Qatar In­vest­ment Author­ity sovereign wealth fund has $300 bil­lion in re­serves that it could liq­ui­date. Qatari stocks have weak­ened and the riyal has been volatile in the spot mar­ket since Saudi Ara­bia, the United Arab Emi­rates, Bahrain and Egypt cut diplo­matic and trans­port ties with Qatar on June 5, ac­cus­ing it of back­ing ter­ror­ism. Doha has de­nied these al­le­ga­tions.

‘Unique sys­tem’

“Qatar has al­ready had a good and unique sys­tem. We have laws es­tab­lished against all these kinds of ter­ror­ists ,” Al Thani told CNBC. “We work with the IMF (In­ter­na­tional Mon­e­tary Fund) and other in­sti­tu­tions to estab­lish our laws and au­dits and re­views.”“We have no chal­lenges, we wel­come those to re­view all our books, they are open,” he added. Al-Thani said while the cen­tral bank has no­ticed fund out­flows from some non-res­i­dents, the amounts weren’t par­tic­u­larly sig­nif­i­cant.

An amount of less than $6 bil­lion left Qatar over the last month, he said. “There is more com­ing in,” he said, con­firm­ing that in­flows are ex­ceed­ing out­flows. Al-Thani said there had been an in­crease of up to $15 bil­lion in the first week in the us­age of cen­tral bank’s repo fa­cil­ity by the com­mer­cial banks. “We have enough CDs (cer­tifi­cate of de­posits) and Trea­sury Bills and Trea­sury Bonds in the hand in the as­set side of the bank­ing sec­tor, that pro­vide them with the liq­uid­ity,” he said.

He also said the sta­bil­ity of the Qatari riyal, which is pegged to the US dol­lar, will “con­tinue for the fu­ture.” Al-Thani said long-term con­tracts in the gas and oil sec­tors were not see­ing any dis­rup­tions. Rat­ing agency Moody’s In­vestors Ser­vice ear­lier this month changed the out­look on Qatar’s credit rat­ing to neg­a­tive from sta­ble, cit­ing eco­nomic and fi­nan­cial risks aris­ing from the on­go­ing dis­pute be­tween Qatar and the Saudi-led al­liance.

De­spite the mar­ket ruc­tions, econ­o­mists say Qatar, the world’s top liq­ue­fied nat­u­ral gas ex­porter, has taken a num­ber of mea­sures such as a planned boost in gas out­put and new trans­port routes to weather the cri­sis. Qatar’s bank­ing sec­tor still has sig­nif­i­cant de­pen­dence on for­eign fund­ing. Thirty-six per­cent of com­mer­cial banks’ to­tal li­a­bil­i­ties in May were to for­eign­ers, in­clud­ing oth­ers in the six-na­tion Gulf Co­op­er­a­tion Coun­cil (GCC). Saudi, UAE and Bahraini banks have al­ready largely frozen new busi­ness with Qatar be­cause of guid­ance from their cen­tral banks; some jit­tery for­eign banks have fol­lowed suit.

Should the rift es­ca­late and more money flows out, the coun­try’s bank­ing sys­tem has enough buf­fers to “meet all the re­quire­ments,” ac­cord­ing to Al-Thani. “We find our bank­ing sec­tor well-cap­i­tal­ized, meet­ing Basel III as they have high liq­uid as­sets, plus they have very good in­ter-bank­ing ac­tiv­ity in­side and out­side, and they are very sta­ble at this moment. So we don’t be­lieve there is any­thing to worry about at this moment.”

Joint ven­ture with To­tal

State-owned Qatar Petroleum and French en­ergy gi­ant To­tal will for­mally launch a 25-year joint ven­ture to de­velop the Al Sha­heen oil field this week, the com­pa­nies said yes­ter­day. The North Oil Com­pany, to be launched today, will be made up of a 70 per­cent stake from QP and a 30 per­cent stake from To­tal, which is tak­ing over op­er­a­tions from Maersk Oil, ac­cord­ing to a state­ment re­leased by Qatar Petroleum. The site it will de­velop is lo­cated some 80 kilo­me­ters off Qatar’s north­east coast and lies over the North Field, one of the world’s largest oil and gas fields.

While the con­tract was an­nounced last year, the launch comes amid the worst cri­sis to hit Qatar, the world’s largest ex­porter of nat­u­ral gas, in years. Saudi Ara­bia, the United Arab Emi­rates, Egypt and Bahrain last month cut diplo­matic, po­lit­i­cal, and eco­nomic ties with Qatar, which they ac­cuse of sup­port­ing Is­lamist ex­trem­ism. Qatar de­nies the charges.

De­spite its re­gional iso­la­tion, Qatar has said it can sur­vive what it has called a “block­ade”. Qatar Petroleum last week an­nounced it would in­crease nat­u­ral gas pro­duc­tion by 30 per­cent by 2024. Cen­tral bank Gover­nor Sheikh Ab­dul­lah Bin Saoud Al-Thani also told US me­dia at the week­end that Qatar has $340 bil­lion in re­serves to weather the cri­sis.

The sign­ing of the To­tal con­tract also comes amid re­ports that Saudi Ara­bia and the UAE may pres­sure in­ter­na­tional com­pa­nies to ei­ther do busi­ness with them or with Qatar. The deal comes in the same month that To­tal de­fied US pres­sure to sign a multi-bil­lion gas con­tract with Iran on July 3, the first by a European firm with Tehran in more than a decade. —Agen­cies

DOHA: In this Satur­day, April 7, 2012 file photo, the new high-rise build­ings of down­town Doha, pho­tographed in the back­ground as Qatari women and a man walk by the sea. —AP

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