DOHA: Qatar’s public debt declined to 32 percent of GDP in 2013, as the government-issued bonds and sukuk matured. Debt issuance, however, in the form of T-bills and bonds continues apace as the authorities manage liquidity and further develop the domestic debt market, NBK’s Mena Outlook for
the first quarter of 2015 (Q1, 2015) noted.
Qatar’s current account surplus, while still large by international standards at an estimated 27.6 percent of GDP in 2014, is projected to narrow to 21.2 percent of GDP in 2015 and 16.6 percent GDP in 2016 due to a combination of plateauing LNG and crude oil exports, softer energy prices and rising imports. While export growth is expected to level off, the commissioning of the Barzan facility should provide some increase in exports of products associated with gas production such as LPG and petrochemicals.
Imports, on the other hand, will continue to be spurred on by population growth and the materials and services needs of the development plan.
The NBK outlook forecast the pace of accumulation of foreign exchange reserves is likely to slow. Qatar’s international reserves increased to a record high of $45.3bn in October 2014, which is equivalent to more than eight months of import cover. The pace of reserve accumulation, however, has slowed in 2014 in line with slowing export growth.
According to the report, Qatar’s banking sector assets topped $270bn in September 2014 on the back of robust credit and investment growth, although the following month saw them drop back down to $266bn.
This was still a healthy increase of 6.5 percent year-on-year. This is the third largest in the GCC after the UAE and Saudi Arabia, and comes after the country recorded the fastest asset growth in the region in 2013 with 11.4 percent.
As a share of GDP, banking sector assets reached 123 percent in 2013. Moreover, asset quality is strong, with non-performing loans (NPLs) below 2 percent. With tier-1 capital standing at 15 percent at the end of 2013, banks are well capitalized and above the Qatar Central Bank’s (QCB) minimum threshold of 12.5 percent under Basel III.
Lower energy prices are expected to lead to a narrowing of the fiscal and current account surplus.
Qatar’s budget surplus is forecast to narrow from an expected 10.8 percent of GDP in 2014 to 8.0 percent and 5.0 percent of GDP in 2015 and 2016, respectively.
Revenue growth is expected to moderate due to the impact of lower energy prices on hydrocarbon revenues, which account for at least 55 percent of total state revenues.
An environment of softer oil prices — and by extension gas prices, which tend to be indexed to oil — is expected to persist during the forecast period.
Exports of manufactured products, receipts from corporate taxes and income from investments, on the other hand, are expected to increase.
On the expenditures side, development spending, which includes outlays on public infrastructure projects, is expected to accelerate and come in above 35 percent of total expenditures and 10 percent of GDP as project execution picks up.
Current expenditure growth, including salaries, is expected to be more restrained.
The Peninsula
