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Friday, March 5, 2021

Qatar freezes budget spending after posting QR137bn surplus

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For illustrative purposes only.
For illustrative purposes only.

Despite the rising cost of construction and day-to-day living in Qatar, government bureaucrats will be expected to make do with the same amount of money through the end of 2015 as last year.

Qatar’s government, which is in the process of changing the end of its fiscal year to Dec. 31 instead of March 31, has said revenue and expenditure forecasts for the next nine months will be kept on par with the last fiscal year through December.

This may come as a relief to some organizations, which were worried about impending budget cuts as Qatar tightens its spending amid dropping oil prices.

In a statement from the Ministry of Finance today, officials said Qatar had a record budget surplus during its last fiscal year and plans to push ahead with the country’s major development projects.

Controlling spending

Government expenses are forecast to remain at QR163.8 billion (US$44.98 billion) over the nine months between April and the end of December. Spread out over a full year, that works out to QR218.4 billion ($60 billion) – the same amount that was included in the 2014-15 budget.

Whether government officials stay within that budget, however, is another matter.

Qatar overspent its state budget by an average of 23 percent in the decade leading up to 2013, when delays to major projects such as the new Hamad International Airport prompted the government to narrowly spend less than expected, Reuters reported at the time.

Qatar Emir Sheikh Tamim
Qatar Emir Sheikh Tamim

However, the country’s political leaders, including the Emir, have recently spoken publicly about the need to control spending:

“Waste, extravagance, mishandling of state funds, lack of respect for the budget, reliance on the availability of money to cover up mistakes are all behaviors that must be disposed of,” Sheikh Tamim bin Hamad Al Thani told the Shura Council in November.

And earlier this month, the Emir signed into law new legislation that gives the country’s finance ministry more powers to “protect public funds.”

Widening surplus

In a statement announcing its nine-month budget, the Ministry of Finance said the government ran a QR137 billion ($37.62 billion) surplus during its most recent fiscal year, but did not provide a detailed breakdown.

That’s a 19-percent jump from the QR114.98 ($31.57 billion) surplus recorded in 2013-14 and is more than triple the QR44.28 billion ($12.16 billion) surplus the government posted in 2011-12, according to figures published by the Qatar Central Bank (QCB).

This year’s surplus will be used to build up the QCB’s reserves as well as provide more capital to be deployed by the Qatar Investment Authority, the government said.

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

According to analysts, Qatar’s large surpluses are due in large part to the conservative price for oil that is sets when estimating revenues, a price that is often correlated to the cost of natural gas.

For example, Qatar’s 2014-15 budget included an oil price estimate of $65 per barrel. The actual price was much higher for most of last year, allowing the country to build up large surpluses. However, toward the end of 2014, oil prices took a nosedive.

Despite the drop in energy resource revenue, Qatar Finance Minister Ali Shareef Al Emadi said the country will continue its current pace of spending on major capital projects, particularly those related to health, education, infrastructure, transportation, rail and the 2022 World Cup.

Development projects make up 40 percent of the state’s current budget, or QR65.6 billion ($18.01 billion) over the next nine months.

With these estimates, the Finance Ministry said it expects to run a QR5.5 billion ($1.51 billion) surplus in the final nine months of 2015.

However, that runs counter to the forecast of one local bank, which recently predicted that the country would actually register its first deficit in more than a decade.

Thoughts?

23 COMMENTS

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A_qtr
A_qtr
5 years ago

Maybe no more lavish ceremonial parties which celebrate nothing

Nuremburg
Nuremburg
5 years ago
Reply to  A_qtr

Or no more 5-story mansions for every nephew, aunt, and cousin of the emir.

wishful
wishful
5 years ago
Reply to  Nuremburg

wishful thinking 🙂

al-Lalal
al-Lalal
5 years ago
Reply to  A_qtr

No more paintings of guys drinking and playing cards or Tahitian girls.

Yacine
Yacine
5 years ago

Good news. They are not going to kick us out (us expats) massively for now 🙂

soccer
soccer
5 years ago
Reply to  Yacine

so no school places still?

Mohamed
Mohamed
5 years ago

Where is the budget cut for QF?

soccer
soccer
5 years ago
Reply to  Mohamed

why should there be one?

Mohamed
Mohamed
5 years ago
Reply to  soccer

Not that there should be. All that rumours by “intellectuals” – was just wondering

brorick
brorick
5 years ago
Reply to  soccer

because they spend vast amounts of money needlessly

Michkey
Michkey
5 years ago
Reply to  Mohamed

QF is the only sane effort that marks Qatar aside from the rest of oil-rich GCC nations. Without intellectual enrichment, this country cannot sustain and will reduce to dust once the outsiders are gone.

sicti
sicti
5 years ago
Reply to  Michkey

Well said!

MIMH
MIMH
5 years ago

It’s a good move, spending was getting out of control and being wasted by many government entities. It’s about time they learnt that budgets do not always go up.

Illusionist's wife
Illusionist's wife
5 years ago
Reply to  MIMH

Question is just if they really will stick to the budget …

The Reporter
The Reporter
5 years ago

Great – the QIA gets more cash to invest abroad and raise property prices to new levels.

MIMH
MIMH
5 years ago
Reply to  The Reporter

Do you mean property prices in Qatar or abroad?

The Reporter
The Reporter
5 years ago
Reply to  MIMH

Abroad. London is being bought bit by bit by the Middle East and China..

Daniel Schriefer
Daniel Schriefer
5 years ago

Freezing the budget to the value of the previous year actually means a reduction in spending as the prices have risen compared to 2014. There wasn’t a zero percent inflation.

Russ Sandlin
Russ Sandlin
5 years ago

What is the Price per Barrel of Oil and the price for Gas they have built into this years budget? I did not see that.

Illusionist's wife
Illusionist's wife
5 years ago
Reply to  Russ Sandlin

I think it was US$ 65, but they amended it to US$ 55 … this is what I have heard, not sure though if these are the prices they actually based the calculations on now 😉

Daniel Schriefer
Daniel Schriefer
5 years ago

They will actually never tell you the truth. The rest is called ‘propaganda’.

Illusionist's wife
Illusionist's wife
5 years ago

I know, and am not expecting this 😉

Coco
Coco
5 years ago

Oh goodie! More bounced cheques on the market with everyone claiming lack of funds due to “government spending cuts”.

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