OVERHEATING ECON­OMY THROUGH IN­VEST­MENTS: IMF

Qatar's on­go­ing pub­lic in­vest­ments could over­heat the econ­omy in near term, and the prospects of a fur­ther rise in US in­ter­est rates may “com­pli­cate” ef­forts to bol­ster real eco­nomic growth, which is ex­pected to be 3.4% this year, ac­cord­ing to the In­terna

Qatar Today - - AFFAIRS > LOCAL -

“Do­mes­tic risks are re­lated to the on­go­ing pub­lic in­vest­ment pro­gramme. While cru­cial for fur­ther eco­nomic de­vel­op­ment and di­ver­si­fi­ca­tion, it could bring about overheating in the near term, po­ten­tial re­source mis­al­lo­ca­tion and re­duced ex­pen­di­ture ef­fi­ciency in the medium term,” the IMF said in its Ar­ti­cle IV con­sul­ta­tion with Qatar.

Al­though fis­cal ad­just­ment planned in 2017 by the au­thor­i­ties is mov­ing in the right di­rec­tion, the re­port said fis­cal and ex­ter­nal bal­ances are “pro­jected to per­sist in the near term,” though im­prove­ments are pro­jected for the medium term, as hy­dro­car­bon prices re­cover slightly and fis­cal ad­just­ment ad­vances.

The pace and the com­po­si­tion of the ad­just­ment should strike a bal­ance be­tween rev­enue in­creases and ex­pen­di­ture re­straint in the medium term, it said.

Con­tain­ing the wage bill, pub­lic ser­vice ben­e­fits, sub­si­dies, and goods and ser­vices ex­pen­di­ture are some av­enues to rein in pub­lic spend­ing, while pre­serv­ing growth­pro­mot­ing pub­lic in­vest­ment, ac­cord­ing to the IMF.

“The prospects of fur­ther rises in the US in­ter­est rates may com­pli­cate ef­forts to bol­ster eco­nomic growth,” it said, adding that spillovers to the non-oil sec­tor would be trans­mit­ted through slower gov­ern­ment spend­ing and de­clin­ing liq­uid­ity in the bank­ing sys­tem.

Newspapers in English

Newspapers from Qatar

© PressReader. All rights reserved.