Qatar will continue with cuts to state spending
doha — Pressure on Qatar’s state finances is easing because of higher oil prices and the government may not need to issue an international bond this year, but it is still seeking ways to save money, finance minister Ali Sherif Al Emadi said on Tuesday.
“We may not issue a bond this year given where oil prices are — right now, we are close to breakeven,” Al Emadi said in a briefing on the financial outlook for the world’s top liquefied natural gas exporting nation.
Qatar’s last international bond issue was a $9 billion sale last May. Al Emadi said another issue was an option in the 2017 budget, but no decision had been made on whether to exercise it.
Qatar’s 2017 budget projected its deficit would shrink to 28.3 billion riyals ($7.8 billion) from 46.5 billion riyals planned for 2016. Since the 2017 budget assumed an average oil price of about $45, the deficit is now close to disappearing, Al Emadi said.
However, he made clear that an austerity drive would continue. The 2017 budget envisages spending will drop to 198.4 billion riyals, two per cent lower than the 2016 plan, because of a nine per cent cut in government operating expenses and a 1.5 per cent fall in the total salary bill.
“We are becoming more efficient on the operating side of the government but we need to do more on investment and the capex side,” Al Emadi said.
For the sake of fiscal discipline, Qatar will not use assets from its sovereign wealth fund to fund its deficit, and the government is scaling back state projects which it thinks the private sector can handle instead, he said.
In the past 18 months, between $8 billion and $9 billion of such projects were given to the private sector, he added.
Al Emadi said the government was spending close to half a billion dollars a week on capital projects, focusing on preparations to host the 2022 World Cup soccer tournament. Ninety per cent of World Cup projects have been awarded and twothirds of them will be delivered in the next 24 months, he said.
He predicted Qatar’s economy would grow 3.4 or 3.5 per cent this year. It will face a drag in 2018 when Qatar, along with other countries in the region, introduces a value-added tax to boost non-oil revenues; Al Emadi estimated the tax would absorb between one and two per cent of gross domestic product.
Also, the country’s population is expected to peak between 2017 and 2019, Al Emadi said. However, officials believe government projects will underpin growth until the World Cup and are adjusting spending plans to ensure there is no sudden reduction in economic stimulus after 2022.
“What we’re trying to do is really prioritise 2022, so we have a good and moderate growth rate. After [2022], it will mainly be infrastructure projects. The airport can have some sort of expansion and part of the rail [network] can have some sort of expansion.” — Reuters
Brazil, Mozambique
QP won a bid for 40 per cent of a plot for exploration in Cyprus, and expanded into Morocco for exploration, Al Kaabi said. “With how big the market is, and the limitation on how much you can develop in Qatar, we want to go external to further develop our strength in LNG,” he said. “That’s why you see us expanding internationally. We will remain for a very long time the leader in LNG.”