IMF Executive Board Concludes 2012 Article IV Consultation with Qatar

Public Information Notice (PIN) No. 13/05
January 16, 2013

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case. The staff report (use the free Adobe Acrobat Reader to view this pdf file) for the 2012 Article IV Consultation with Qatar is also available.

On January 11, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Qatar.1


Qatar has benefitted from high oil and natural gas prices and production, with expansionary government spending and an accommodative monetary stance providing additional stimulus. The government has now shifted its focus to economic diversification and growth in nonhydrocarbon sectors through targeted infrastructure investments. Growth rates are stabilizing in 2012, mainly due to a slowdown in hydrocarbon sector growth, as the self-imposed moratorium on increasing liquefied natural gas (LNG) capacity kicks in. The nonhydrocarbon sector is projected to grow at a pace of 9 percent in 2012, driven by the construction, transport and communications, trade and hotels, and services sectors. For the second year in a row, average CPI inflation is expected to average around 2 percent in 2012, mainly due to depressed rents.

The banking system remains highly capitalized and profitable. The capital adequacy ratio of commercial banks rose from 16.1 percent in 2010 to 21.1 percent in June 2012, while nonperforming loans declined from 2.0 to 1.7 over the same time period, and the return on assets recording 2.5 percent in June 2012.

The economic outlook remains strong with robust nonhydrocarbon growth, and inflation rising only gradually over the medium term. The main downside risks are lower hydrocarbon prices, tightening of external financing conditions, and potential disruption in transportation of LNG due to increased geopolitical tensions. Growth in the nonhydrocarbon sectors will range between 9 and 10 percent over the medium term, while the hydrocarbon sector is projected to grow between -1.1 percent and 3.5 percent over the medium term. As infrastructure-related construction activities pick up, as the demand-supply situation in the real estate market converges, and as the expatriate population increases, inflation will gradually increase from 3 percent in 2013 to 5 percent by 2016. Fiscal and external surpluses are projected to taper down significantly, due to flat LNG and a declining trend in crude oil production and exports, and due to higher fiscal expenditure.

Executive Board Assessment

Executive Directors agreed with the thrust of the staff appraisal. They welcomed Qatar’s continued strong macroeconomic performance, underpinned by sound policies and growth in the nonhydrocarbon sector. Fiscal and external surpluses are high, consumer price inflation is low, and the medium-term outlook for the economy remains favorable. Directors noted the positive regional spillover effects of Qatar’s high growth, public spending, and increased financial assistance.

Directors commended the authorities’ focus on advancing economic diversification and growth in nonhydrocarbon sectors. To ensure the smooth implementation of the large infrastructure investment program, Directors saw merit in developing a contingency plan against potential risks from fluctuations in hydrocarbon prices and a tightening of external financing. Directors also underscored the importance of an integrated public investment management process to manage implementation risks.

Directors welcomed the adoption of a three-year budget framework to help shield government spending from revenue volatility and enable better utilization of resources. They underscored the need to enhance the credibility of the annual budget and initiate macroeconomic forecasting through a macrofiscal unit. A formal fiscal rule could reinforce the fiscal framework.

Directors encouraged the authorities to persevere in their efforts to contain current expenditures and prioritize capital spending. They welcomed the authorities’ commitment to increasing fiscal savings in the medium term for building buffers against shocks, saving for future generations and fully financing the budget after 2020 from nonhydrocarbon revenues.

Directors noted that inflation remains subdued. However, they advised the authorities to remain vigilant of any emerging inflationary pressures and stand ready to restrain current expenditures to control aggregate demand, and to manage liquidity by absorbing the structural liquidity surplus. Directors encouraged development of a liquidity forecasting framework and macroprudential measures for effective policymaking, especially to smooth excessive credit growth. They welcomed the measures to boost financial oversight further, by providing the legal mandate of financial stability to the central bank and establishing the Financial Stability and Risk Control Committee to provide a formal structure for coordination among the regulatory bodies.

Directors noted that the banking system is resilient and remains well capitalized. They underscored the need to reduce the buildup of liquidity and currency mismatch risks and to prevent accumulation of excessive exposure to the real estate sector. Directors welcomed the authorities’ efforts to develop a deep and liquid domestic debt market, which will bring important benefits in financing, monetary transmission and liquidity management.

Directors recognized the improvement in statistics, and looked forward to continued efforts in this area, particularly through greater coordination across agencies.

Qatar: Selected Economic and Financial Indicators, 2008–13
  2008 2009 2010 2011 2012 2013

Production and prices


Real GDP (percent per annum)

17.7 12.0 16.7 13.0 6.6 5.2

Hydrocarbon 1

13.2 4.5 28.8 15.7 3.6 0.4

Nonhydrocarbon GDP

21.3 17.6 8.6 10.8 9.0 9.0

Nominal GDP (US$ billions)

115.3 97.8 127.3 173.3 184.7 191.5

Consumer price index (period average)

15 -4.9 -2.4 1.9 2.0 3.0
  (Percent of GDP on fiscal year basis) 2

Public finance


Total revenue

34.9 44.2 30.9 38.6 43.3 40.6

Hydrocarbon revenue

19.8 21.6 19.2 24.2 21.8 20.6

Other revenue

15.1 22.6 11.7 14.4 21.5 20.0

Total expenditure and net landing

24.8 31.8 28.5 30.4 35.2 30.0

Current expenditure, of which:

16.5 21.5 19.7 18.6 20.3 20.8

Wages and salaries

4.6 5.6 4.6 4.3 5.4 5.3

Capital expenditure

8.3 10.3 8.8 7.9 8.7 9.2

Overall fiscal balance (deficit -)

10.2 12.4 2.4 8.2 8.1 10.6
  (Annual change in percent)



Broad money

19.7 16.9 23.1 17.1 20.7 13.9

Claims on private sector

42.4 7.0 10.6 19.5 10.3 12.9
  (US$ millions, unless otherwise stated)

External sector


Exports of goods and services, of which:

73,024 48,280 81,722 119,609 125,965 127,356

Crude oil and refined petroleum products

29,438 18,384 29,099 35,137 38,175 37,680

LNG and related exports

32,267 23,947 43,535 70,318 71,755 71,844

Imports of goods and services

-35,047 -30,118 -37,889 -47,667 -50,579 -55,148

Current account

33,032 9,987 34,099 52,757 55,042 57,128

In percent of GDP

28.7 10.2 26.8 30.4 29.8 29.8

Central Bank reserves, net

9,832 18,352 30,720 16,305 46,337 57,794

In months of imports of goods and services 3

3.9 5.8 7.7 3.9 10.1 11.8

Exchange rates (riyals/US$)

3.64 3.64 3.64 3.64 ... ...

Real effective exchange rate (percent change)

6.3 -1.7 -5.6 -5.2 ... ...









Sources: Data provided by the authorities; and IMF staff estimates and projections.

1 Staff estimates; include crude oil, LNG, propane, butane, and condensate.

2 Fiscal year begins in April.

3 Next 12 months.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here:


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