Qatar: 2014 Article IV Consultation-Staff Report; Press Release; and Statement by the Executive Director for Qatar

Publication Date: May 06, 2014
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Summary: KEY ISSUES Context. As the world’s largest exporter of liquefied natural gas (LNG), Qatar has turned into an important global financial investor, donor, and labor importer. Growth averaged 14 percent over the past decade and GDP per capita has reached $100,000, the highest in the world. Qatar remains insulated from sluggish global growth thanks to high hydrocarbon prices and a large public investment program to support economic diversification and prepare for the FIFA 2022 Championship. Outlook and risks. Macroeconomic performance is expected to remain strong, driven by the non-hydrocarbon sector which accounts for almost one-half of the economy. Potential challenges include the risk of over-heating in the near term and over-capacity in the medium term as a result of the large public investment program. The possibility of a sharp decline in oil and gas prices remains the main medium-term risk; however, the authorities have ample fiscal and external buffers to deal with contingencies. Risks from public investments. Policymakers need to remain vigilant about overheating risks. Capital spending should be smoothed if signs of overheating emerge, and liquidity withdrawal operations and further macroprudential measures deployed in case of excessive credit growth or risk-taking. A comprehensive public investment management framework would increase the efficiency of public spending and reduce the risk of overinvestment. Fiscal reforms. The authorities have appropriately been saving the large fiscal surpluses, and have started introducing a medium-term focus into the budget process by implementing a three-year budget framework and establishing performance measures. The framework should be accompanied by realistic hydrocarbon price assumptions and a more detailed multi-year expenditure plan. Financial sector. The authorities are implementing an ambitious financial regulatory agenda, including establishing an umbrella advisory committee and issuing a final Basel III circular. Banks remain well capitalized and liquid, but the authorities should continue carefully monitoring vulnerabilities through an enhanced early warning system. Diversification. The authorities are also supporting economic diversification through measures to further financial deepening and private sector development.
Series: Country Report No. 14/108
Subject(s): Article IV consultation reports | Economic growth | Hydrocarbons | Fiscal policy | Public investment | Monetary policy | Banking sector | Exchange rate assessments | Economic indicators | Debt sustainability analysis | Staff Reports | Press releases | Qatar | Housing prices

Notes Also available in Arabic
Publication Date: May 06, 2014
ISBN/ISSN: 9781484368541/1934-7685 Format: Paper
Stock No: 1QATEA2014001 Pages: 53
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