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Friday, April 23, 2021

Finance minister: No subsidy cuts, project cancelations on the horizon

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For illustrative purposes only
For illustrative purposes only

Qatar does not have any plans to cancel major development projects or cut state fuel and food subsidies in response to low global oil prices, the country’s finance minister has said.

Things will be “business as usual” in terms of the execution of Qatar’s planned $200 billion worth of infrastructure projects, many of which are already underway, Ali Shareef Al Emadi said during a lecture yesterday at Carnegie Mellon University in Qatar.

After oil prices began plummeting in the past year, from around $100 a barrel last summer to less than $50 for Brent Crude now, other GCC states started reviewing their spending.

Elsewhere in the Gulf

Before last month, all Gulf states heavily subsidized petrol, food and other fuel for their own citizens, as part of a package of welfare measures.

Photo for illustrative purposes only.
Photo for illustrative purposes only.

However, the UAE announced in July that from Aug. 1 it would end its fuel subsidies, in a bid to relieve some of the pressure on its economy caused by falling oil prices.

Saudi Arabia is also said to be reconsidering its gas subsidies, which help to make its petrol prices among the lowest in the world.

A Gulf oil industry source told Reuters that officials were “seriously” thinking about reducing fuel subsidies gradually, although there was no timeline for this, and the Saudi government has not publicly commented on the rumors.

Saudi’s petrol subsidies are worth $86 billion a year, out of a total of $107 billion of overall energy subsidies, according to the Financial Times.

Lacking deficit

However, Al Emadi suggested yesterday that Qatar was in a different place financially, as it has a strong national budget and cash reserves that could help it withstand low oil prices.

Minister of Finance Ali Shareef Al Emadi
Minister of Finance Ali Shareef Al Emadi

In a recent Reuters poll, economic experts predicted that Qatar’s state budget would have a deficit of 0.7 percent of gross domestic product (GDP) this year, which is the smallest in the region, although Qatar has not previously been in the red.

“Our budget is still not that far in terms of deficit,” Reuters reports Al Emadi as saying, adding that state finances would break even with an average oil price of $65 a barrel.

Asked whether he would consider reducing subsidies as a way of cutting back costs, the finance minister said:

“I still think the financial situation is very healthy and I don’t think we’ll take any extra measures for these things.”

Gulf Times quoted the minister as adding:

“We have an almost 15-year surplus budget from 2000-2015 and Qatar never had any deficit. We’ve stuck with the oil prices at this level… there is enough room for us to manage this.”

Infrastructure

Meanwhile, those in the construction industry remain concerned that projects not directly related to Qatar’s preparations for hosting the World Cup in 2022 may face delays.

To this point, Al Emadi said:

“We’re not going to scale back. Most of our projects are already at the execution stage so we’re going to continue with those – we’ve already put a public plan of what we’re actually going to do for the next 10 years.

Whatever we decide, we’re going to be more effective and efficient. We’re always going to make sure that we’re getting value for our money when it comes to these projects.”

While major projects such as the Doha Metro, the new Port project and Ashghal’s Expressway Program are underway, other schemes appear to be moving more slowly.

Earlier this year, Dubai-based business intelligence firm MEED reported that the iconic Sharq Crossing, linking the business district of West Bay/Dafna with Hamad International Airport, would be postponed as Qatar deferred non-essential infrastructure schemes.

Sharq Crossing rendering
Sharq Crossing rendering

The move followed a decision by the government just a week prior to establish a ministerial committee overseeing projects of “strategic importance.”

This was tasked with prioritizing major development initiatives and reviewing costs, among other responsibilities.

The minister’s emphasis on ensuring “efficiency” in public spending follows a period of restructuring in some of Qatar’s public sector bodies, resulting in staff being laid off and some projects being closed.

Qatar Petroleum reportedly lost thousands of staff in its eight-month long corporate “right-sizing”, which finished in June this year and transferred non-core business operations involving insurance, catering and service companies to the private sector.

It is also expected that head count will be cut in some of its subsidiary companies, including RasGas, QatarGas, Qatalum and QChem.

And Qatar sovereign wealth fund QIA has also reportedly reviewed its priorities recently, as the lower oil prices ate into its available funds.

Thoughts?

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qatari
qatari
5 years ago

please do some cuts , to QF & QM . you would have billions left in the budget .

Anonmauser
Anonmauser
5 years ago
Reply to  qatari

The cuts at QF have already been deep and extensive. What is QM?

qatari
qatari
5 years ago
Reply to  Anonmauser

not deep enough , its still not making profit or success, still funded by the GOV & still has more staff than students, QM = qatar museums

AEC
AEC
5 years ago
Reply to  qatari

You sound like you’re assuming the purpose of QF is teaching. Isn’t that a pretty limited view of the stated objectives?

qatari
qatari
5 years ago
Reply to  AEC

let me say this , is it making profit from the gov money or just adding up more costs with no profit.

AEC
AEC
5 years ago
Reply to  qatari

I have no idea but are you expecting it to be run as a business? Following that logic government wouldn’t spend any money unless it made an immediate profit. Sometimes things are invested with a different intent than immediate cash return.

AEC
AEC
5 years ago
Reply to  AEC

their specific stated intent is as a non-profit – http://qf.qa/about/about

WTF
WTF
5 years ago
Reply to  AEC

Ask yourself, why would a government-funded entity label itself as “private, non-profit organization”?

AEC
AEC
5 years ago
Reply to  WTF

I’ll leave that to the Qataris to figure out

WTF
WTF
5 years ago
Reply to  AEC

The Qataris in charge of QF have figured it out already: that is the best setup for spending untold billions with no government control.

Anonmauser
Anonmauser
5 years ago
Reply to  WTF

Words are slippery, just look at how Qatar Airways’ relationship with the government is described.

Osama Alassiry AlMaadeed
Reply to  Anonmauser

https://en.wikipedia.org/wiki/Qatar_Airways#Ownership_and_subsidiaries is accurate:

As of May 2014, the company is fully owned by the Qatari government.

Anonmauser
Anonmauser
5 years ago

Exactly my point, thank you.

Joe
Joe
5 years ago

In this region, there’s a thin line between what is governments’ funds and what’s private business, they both are controlled by the same individuals!

Spirit
Spirit
5 years ago
Reply to  qatari

When it comes to the value of research, education, science and technology, cultural investments (QM and QF), one cannot always think in terms of red ink and black ink at the end of a financial year. Benefits tend to be amorphous and bear fruit in the long term. So it is a matter of Qatar investing in these areas now for the future.

Yacine
Yacine
5 years ago
Reply to  Spirit

QF is wasting most of its budget on oprational expenses, as well as on big, high, luxuriously-fitted buildings. If you think that the bulk of the budget is going to research, you are dreaming.

If you add to that some poorly thought-of and/or implemented projects (Science Park, Sidra), you come to the conclusion that it is indeed a waste of money. What QF has achieved so far could have been achieved by the tenth of the budget in any other part of the world.

AEC
AEC
5 years ago
Reply to  Yacine

So, assuming this is the case, what’s your back out plan? One that doesn’t do even more damage to Qatar’s international reputation than has already been done?

Spirit
Spirit
5 years ago
Reply to  Yacine

Big and high? Have you ever even driven past Education City? Besides, the buildings are a one time investment so it doesn’t make sense to compare this investment to continuous research. And yes, Sidra has problems but that is to be expected in any country that is investing as quickly and as extensively as Qatar. Successes are accompanied by failures…it’s just part of life.

Yacine
Yacine
5 years ago
Reply to  Spirit

Sidra, National Library, Musheireb project, Science Park, etc. it seems like apart from universities it is all failures from QF. And besides that, we are talking about the money invested in these projects rather than the project ideas themselves. I have no issues with a science park, a museum or a national library as long as they happen at a reasonable cost and with minimal delay, and that their benefits are tangible for everyone. That does not seem to be the case here.

Michael Fryer
Michael Fryer
5 years ago
Reply to  Yacine

You’re forgetting the money pit that is the QFC. The amount of money that gets thrown at that place is staggering.

The latest departure from there is the Qatar Reinsurance Company LLC, who will leave Qatar to be domiciled in Bermuda.

Simon Green
Simon Green
5 years ago
Reply to  Yacine

To add to the Sidra point there are hundreds of American Doctors being paid huge salaries with no patients to treat and with at least a few years to the place opens.

readabook000
readabook000
5 years ago
Reply to  qatari

One good thing QF is doing is allowing a LOT of very brilliant and accomplished female Qatari students an advanced, world-class education that they can pursue while remaining close to home & family. What’s that mastercard commercial? “Priceless”.

qatari
qatari
5 years ago
Reply to  readabook000

ok lets talk numbers? is it a thousand a year ???? schools this year had 300K student , what was the number of gradutes of QF education city???

readabook000
readabook000
5 years ago
Reply to  qatari

You seem to be making an argument for expansion? I agree with the overall point though, there is definitely a lot of room for improvement in cost-per-graduate.

AEC
AEC
5 years ago
Reply to  qatari

So graduates IS the only objective?

qatari
qatari
5 years ago
Reply to  readabook000

are they like a thousand female graduate ??? if they can fill the minimum demand then i call it a waste, spending billions to get less than 500 Qatari female/( even male actually) graduates , are we throwing money in the sea & calling it an investment in education ????

Oz
Oz
5 years ago
Reply to  qatari

Singapore took 20 years to see the fruits of it’s investment in education and research and is now considered one of the world’s innovation hubs and home to a well educated workforce. It is small like Qatar and years ago made the decision to invest in developing the population through education and look where it is today. It developed into this because it had a long term vision. The only natural resources it was blessed with were it’s people and their entrepreneurial spirit. So this is what they developed and today it’s considered one of the world’s leading cities and countries.

What would you have Qatar spend it’s enormous wealth on if it is not on education? It is already spending on roads, health and infrastructure so what else would you spend this money on?

LBR
LBR
5 years ago
Reply to  Anonmauser

Does anyone realise that QF and QM will be the most historical accomplishments of Qatar post-booming phase. The UK, Italy, France’s developments were all based on periods of great wealth were no expenditure was spared on the arts, on education, on scholars, on science, on architecture. Do you think banking and trade build nations ? The most valuable government spending in Qatar is QF if you ask me. And it’s quite shocking to see people asking whether or not it makes money, this is how you build history, you can’t just be a money-making brainless material land. QF/QM is where the real value is built. And when I say value, I don’t mean just non-measurable cultural development, I also mean human development, strategic influence, a seat among the nations that decide the fate of the world. Trying to elevate the debate here… We still visit the Roman Colloseum today, over 2000 years later, I am sure a lot of Romans disapproved of its cost…

Anonmauser
Anonmauser
5 years ago
Reply to  LBR

Don’t disagree, but the neoliberalist managers now running Qatar education and research might.

qatari
qatari
5 years ago
Reply to  LBR

your point has a big hole in it, ROMAN COLOSSEUM build by ROMANs ,QF has imported universities , which doesnt even has more students than staff .their graduates are less than 1000 , & not even half are QATARIS .QU which a single university has 3600 student this year .
so yeah , even if QU gives 1000 gradutes only , it still a better option than QF universities combined . which one is better you say.?????

Anonmauser
Anonmauser
5 years ago
Reply to  qatari

Until QU raises its standards, the answer is clearly…the QF universities. Sadly, that is not going to happen soon – too much political and social pressure.

Yacine
Yacine
5 years ago
Reply to  qatari

QM is no longer the money sinkhole it used to be. Its budget today is probably less than half what it was 2 or 3 years ago.

qatari
qatari
5 years ago
Reply to  Yacine

still , the money spent on paintings/ sculpture/ art events outside of Qatar , etc many consider it a waste especially when people start to see cuts in jobs around Qatar.

Another Qatari
Another Qatari
5 years ago
Reply to  qatari

I see it as an investment.

qatari
qatari
5 years ago
Reply to  Another Qatari

how ?????????

Another Qatari
Another Qatari
5 years ago
Reply to  qatari

Qatar Museum will host these arts. It’s a very long-term investment that might not look feasible to invest in for the short term, unlike real estate. The liquidity of these art investments is also a factor that should be considered.

Michael Fryer
Michael Fryer
5 years ago
Reply to  Another Qatari

Except that a lot of what has already been purchased was bought for much more than it was believed to be worth:

“The Sheikh’s willingness to spend disproportionate amounts of money for certain objects has astonished the art world. At a sale of Islamic art atChristie’s in London last April The Art Newspaper identified an agent working for Sheikh Saud as the buyer of a Mughal agate and garnet fly-whisk handle formerly belonging to Clive of India for £901,250, 113 times its high estimate of £8,000. At the same sale we also identified the Sheikh as the buyer of two unusual Safavid tiles, both with low estimates of only £1,000, for £31,070 and £94,850 respectively. Sheikh Saud also purchased numerous lots at Sotheby’sand Bonham’s in that week’s Islamic sales.”

http://www.forbes.com/2005/03/15/cx_0315hot.html

qatari
qatari
5 years ago
Reply to  Another Qatari

you said it , long term. people are loosing jobs now, oil prices are low now. we are having issues now, people would like something now,no one is sure about the future . s o keeping spending like it fine we can spend as we wish is risky

Another Qatari
Another Qatari
5 years ago
Reply to  qatari

Priority of sovereign investments is debatable.

qatari
qatari
5 years ago
Reply to  Another Qatari

lets do it this way, imagine Qatar has no oil money & in need of money for its projects , they would sell its art collection for whatever money they would get for it, they would not be at the position where they can say ‘ i got it for 10mil , i need to sell it for 15mil. buyers/collectors know that you are in need of money & will take advantage of that. so you end up selling it for less.

AEC
AEC
5 years ago
Reply to  qatari

the kind of stuff they’ve been buying isn’t very likely to sell for less – at least not based on historical trends. That’s the nice thing about being able to chose what you want.

qatari
qatari
5 years ago
Reply to  AEC

not when ppl are in need, other take advantage. Mughal agate and garnet fly-whisk handle formerly belonging to Clive of India for £901,250, 113 times its high estimate of £8,000 only QM did that , other wont say it worth more than the old estimated price.

AEC
AEC
5 years ago
Reply to  qatari

that is impressive but anecdotal

WTF
WTF
5 years ago
Reply to  AEC

Second-hand huge teddy bears don’t sell well.

Yummykarak
Yummykarak
5 years ago
Reply to  WTF

And it’s kind of creepy! I always thought it looked like it was getting a lobotomy under sitting there under the weird lamp thing….creepy.

AEC
AEC
5 years ago
Reply to  qatari

but they do have oil money and even if the income decreases they still have quite a bit of money – just not as much income as in the past…

qatari
qatari
5 years ago
Reply to  AEC

lets see spending millions/billions on art , or much needed bridges/health infrastructure????

AEC
AEC
5 years ago
Reply to  qatari

bridges? rivers?

qatari
qatari
5 years ago
Reply to  AEC

The Sharq Crossing was to be a 12-kilometer series of tunnels and bridges connecting Hamad International Airport, Katara Cultural Village and the Dafna/West Bay business district.

AEC
AEC
5 years ago
Reply to  qatari

And it was a terrible idea. Good thing they cancelled it.

qatari
qatari
5 years ago
Reply to  AEC

delayed only .

Yacine
Yacine
5 years ago
Reply to  qatari

I totally agree. If it was me I would have shut it down and kept the Museum of Islamic Art and upcoming National Museum. Any other so-called art project should be delegated to Katara and must have a very reasonable budget and human resources.

Michael Fryer
Michael Fryer
5 years ago
Reply to  qatari

I guess you aren’t a fan of the teddy bear in the airport?

qatari
qatari
5 years ago
Reply to  Michael Fryer

not a fan of wasting money .

AEC
AEC
5 years ago
Reply to  qatari

and you’d like to be the one to decide what is waste? or have an input?

qatari
qatari
5 years ago
Reply to  AEC

as a Qatari , i do have the right to say what i like about an issue that has to with budget of QATAR. your input is ???

AEC
AEC
5 years ago
Reply to  qatari

I’m not au fait with the workings of such matters in Qatar or for Qataris so I thought I’d ask. My input is my 2 cents worth – nothing more, nothing less

Anonmauser
Anonmauser
5 years ago
Reply to  qatari

You have no such right, if you are the right person you have the privilege to have your opinion sought.

qatari
qatari
5 years ago
Reply to  Anonmauser

says an person who is here temporary & can be jobless & on the next flight out of here if we had more cuts. im the one the issue matter to the most. its after all a QATARI GOVERNMENT

Anonmauser
Anonmauser
5 years ago
Reply to  qatari

What you say is true…for people in Qatar or somehow employed by a Qatari agency. That is not I. What I say is also true about you. There we go, another point of agreement, we both speak the truth.

Anyway, indeed the issue should matter the most to you, but as the system is currently, you have no right to communicate your opinion to your government.

Yummykarak
Yummykarak
5 years ago
Reply to  qatari

I agree, I also agree that some of the spending on QF could be better spent elsewhere. However, schools such as Awsaj (for special needs) is a good thing for the Qatari youth which is most of the student base there and they also try to find them higher education and jobs for those with special needs even after they graduate. So that is good.
The buying of art and everything else (islands, malls and whatever) could be put aside and the money used better.

qatari
qatari
5 years ago
Reply to  Yummykarak

what is the input & is the output , when it comes to budget . its always like that.

Michkey
Michkey
5 years ago
Reply to  qatari

Without the QF educating at a mass scale, Qatarization is not possible. Qatari students educated abroad to work in Qatar is not an intelligent option.

qatari
qatari
5 years ago
Reply to  Michkey

whats the numbers of graduate of QF in total compare to the billions spent to them .studying abroad is still a better / less expansive option.

Michkey
Michkey
5 years ago
Reply to  qatari

When it comes to education, expense doesn’t define quality. It’s not like buying an LX570 over a landcruiser. And don’t forget it’s a long term investment, There will be Qatari professors instead of the expats and they will change the demographic and stereotype of this nation (look at the spelling mistakes you made). Unlike the engineers of the Doha Metro, the academics of QF I know won’t bat an eyelid to leave Qatar for good. These expenditures are needed to make Qatar sustainable for future generations. I am frustrated to see so many people here lacks that vision and thinks only about themselves. Living in the present is a good thing, but when it comes to the building of a country, trust the visionaries who are building it.

Yacine
Yacine
5 years ago
Reply to  Michkey

A long term investment would be to send Qataris abroad not only for education but for some short experience as well, and then bring them back here to build the companies, ministries and universities of the future. You do not need to bring Western universities here, with their academic and administrative staff, at a huge cost, to achieve this “long-term investment”. Qataris need to live in a foreign country, compete with international students, and work in an international environment in order to get that rich experience so that they are able to create a Western-style modern knowledge economy in Qatar. So if I have to choose between bringing international universities here at a huge cost or using that money to send students abroad, I’d rather send them abroad, but I would keep developing QU for those who can’t go abroad.

Anonmauser
Anonmauser
5 years ago
Reply to  qatari

Yep, agreed. There was Financial Times article in 2007 that analyzed this. The education at the QF is the most expensive in the world, and financially it would much much more sensible to send the students abroad. That is culturally and politically a non-starter though, so the QF will stay I figure.

WTF
WTF
5 years ago
Reply to  Michkey

If you look at cost-per-Qatari-graduate, QF is an incredibly wasteful operation

ShabinaKhatri
ShabinaKhatri
5 years ago
Reply to  WTF

Deleting much of this thread for getting off track.

Ali
Ali
5 years ago
Reply to  ShabinaKhatri

Shabina, we are grown up and mature people and know what’s right and what’s wrong so please stop deleting!

Anonmauser
Anonmauser
5 years ago
Reply to  Michkey

Except that QF is not ‘mass’ – mass education is QU. QF is elite education. Qatari students educated abroad would be, financially at least, a whole lot cheaper. However, that does’t touch on the issue of developing local educational systems and infrastructure, concern about the ideas that the students pick up abroad, etc.

Osama Alassiry AlMaadeed
Reply to  Michkey

LOL.

Ali
Ali
5 years ago
Reply to  qatari

What is QM?!

Yacine
Yacine
5 years ago

Subsidies are by default a bad solution for economic woes. For poor countries, it is a huge burden that leads to more indebtedness, and for rich (non-democratic) countries, it is just a political tool to keep the population quiet, and has no advantage from an economic point of view. One would expect a more balanced and insightful comment from the finance minister, rather than the usual “we have enough money to keep spending as we wish”

AEC
AEC
5 years ago
Reply to  Yacine

He’s got a point though. Even without the enormous income of the past for the number of Qataris there is still a pretty substantial amount of unspent money relative to the stated ambitions of the country. Whether things actually end up costing their stated prices is another matter.

MIMH
MIMH
5 years ago

Does he mean no more cuts or no cuts in the future? QP has cancelled a number of projects including the 6 billion Al karana petrochemical facility. Same as RG, QG, shell, oxy and others.

Qatar also needs to cut fuel subsidises and introduce sales tax at 5% on the majority of items. It needs to prepare for the non gas future and its coming sooner than they think. With a smaller population it is is a better place than the majority of petro States, but no time to rest on its laurels.

Osama Alassiry AlMaadeed
Reply to  MIMH

The finance minister doesn’t control the budget of the companies… QP, RG, QG, shell, oxy and others don’t get their budget from the ministry.

https://www.mof.gov.qa/en/Profile/Pages/ObjectiveDuties.aspx

MIMH
MIMH
5 years ago

QP is in affect a ministry in its own right and is the major shareholder in all those companies. Maybe the finance minister doesn’t get a say but the government does

Edward
Edward
5 years ago

A few of the typical red flags: “to establish a ministerial committee overseeing projects.” Great, yet another layer of bureaucracy to obscure accountability and delay decision making. How many more Excellencies will have their hands in every step? And “transferred non-core business operations involving insurance, catering and service companies to the private sector.” Great, so QP lays off X people, but then various “private sector” entities employ the same X people, along with more layers of management on top. If this is like most such projects, these private sector companies serve as nice side jobs for Qatari QP employees who own them, maybe even the same employees who oversee the contract functions. It’s just constantly passing money around between the various pockets. . .

Ali
Ali
5 years ago

What is really interesting and i can’t explain is that QP and its subsidiaries terminated hundreds of its staff and there are still traffic jams!!

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