## 1qatea2024001 ## Source details **Canonical URL:** [1qatea2024001](https://www.imf.org/-/media/files/publications/cr/2024/english/1qatea2024001.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2024/english/1qatea2024001.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2024/english/1qatea2024001.pdf.json) --- ### State of the Real Estate Sector in Qatar - Market developments and indicators: - Excess supply pushed price indicators further down after the WC. - Real estate price index has remained weak since 2017 and equity prices of the sector underperformed the main index. - Excess supply became more acute after the WC as demand weakened and supply continued to increase in 2023Q1 when developments reserved for the WC were released to the market. - Broader signs of weakening property markets though prime segments perform better: - Residential sales volume contracted by 26 percent in 2022, and another 36 percent in 2023 through April. - Rents have normalized after the WC with incentives such as one-month rent free returning. - Hotel occupancy fell to somewhat above 50 percent in the first several months of 2023. - Office rents in key districts have progressively declined in the past decade, though prime properties have held up better in recent quarters. - Retail rents have continued to fall amid new supply; overall vacancy across Qatar’s main retail malls has risen to above 20 percent in the past decade. - Macroeconomic and financial transmission: - Real estate and contractors represent 1/5 of the stock of bank lending. - Credit supply to the real estate sector accelerated in 2023. - If financing conditions remain tight for longer, asset quality from exposure to real estate could be further pressured. - Banks are reasonably prepared: real estate firms’ median interest coverage ratio improved in 2021, and banks have provisioned for related exposures. - Policy measures and demand support (since early-2023): - Updated law regulating the real estate sector. - Launch of the Real Estate Platform to collect and centralize data. - Establishment of the Real Estate Regulatory Authority. - Refinement of macroprudential measures to enhance risk control of bank lending to the real estate sector. - Other initiatives: the residency program, mortgage for expatriates, and tourism promotion. - Tourism strategy: - National Tourism Sector Strategy aims to attract over 6 million visitors per year by 2030 (2.6 million in 2022). - Prioritize proper implementation—governance, planning, regulations, capacity building, product and service diversification. - Low complexity/high impact measures (e.g., simplifying visa procedures) could be prioritized. - Implications and near-term outlook: - Continued capital expenditure by the state provides some support to construction. - Proper implementation of regulatory, macroprudential, and tourism-related measures should enhance risk monitoring and increase related demand. *Source: Bloomberg, Haver, and IMF staff calculations.* ### Continued Policy Prudence and Reform Momentum — Fiscal Strategy and Recommendations - Recent fiscal stance and context: - Broad fiscal prudence maintained in 2022–23 amid significant hydrocarbon windfalls. - 2022 fiscal stance tightened with the NHPB improving by about 3 ppts of non-hydrocarbon GDP from 2021. - The 2023 wage bill rose by 8 percent above both budget and the 2021 level; mostly offset by lower capital expenditure. - 2023 budget envisages cuts in both capital and other current expenditure, wage bill kept unchanged. - 2023 NHPB is estimated to be broadly in line with the PIH benchmark. - Near-term guidance: - 2024 budget set to assume a conservative oil price and contained public spending. - If growth slowdown sharpens, deploy fiscal space through productive and efficient spending while maintaining fiscal prudence: - Targeted support to vulnerable households and SMEs. - Frontloading planned investment in smaller-scale community infrastructure to support construction. - Avoid additional fiscal cost to support unviable firms. - Medium-term strategy and MTFF recommendations: - Updated medium-term budget (first 5-year period to support NDS3) is an opportunity to recalibrate strategy. - Assuming continued spending discipline, central government debt projected to gradually decline to close to 30 percent of GDP by 2028 (Annex VI). - MTFF recommendations include: PIH-based fiscal anchor, top-down aggregate expenditure ceiling linked to performance, regular fiscal risk assessments, MTFF monitoring tool, and comprehensive sovereign asset-liability management including QIA and GREs. - Staff policy priorities and reform measures: - Adhere to a PIH-based fiscal anchor and maintain sufficient fiscal buffers. - Introduce a broad-based VAT: - Introductory rate of 5 percent (GCC agreement) would bring revenue up to 1½ percent of GDP and increase non-hydrocarbon revenue to around 20 percent of total revenue. - Impact on inflation estimated limited and transitory; consider targeted transfers to vulnerable households. - Speedy implementation of global minimum CIT and consider a CIT for domestic firms at an appropriate threshold. - Rationalize the public wage bill; tighten eligibility for benefits and reduce staffing by natural attrition. - Continue subsidy reforms: lift caps on gasoline and diesel and gradually phase out remaining subsidies with targeted support. - Reorient spending toward private sector-led growth: human capital, business environment, climate sustainability, and energy transition adaptation. - Enhance public investment efficiency via PIMA/Climate-PIMA and crowd in private investment with high efficiency. - Fiscal transparency and coordination: - Broaden publication coverage to general government; improve reporting frequency, timeliness, granularity, and public investment/procurement transparency. - Authorities’ views: - Authorities affirmed commitment to fiscal discipline; prefer introducing VAT and/or other revenue measures when growth is more robust; open to reviewing energy subsidies; ongoing program-based budgeting efforts. *Source: IMF staff report excerpt.* ### Safeguarding Financial Stability — Banking Sector Resilience and Recommendations - Banking sector resilience and near-term risks: - Prudent QCB policies helped maintain financial stability. - Banks have sizeable buffers and continued diligent supervision; emerging pressures on asset quality and profitability warrant close monitoring. - NPL ratios could edge up due to pandemic-era restructures, slower activity, and real estate weakness. - Recent QCB stress tests indicate system resilience, though a few weaker banks could require recapitalization under severe shocks. - Foreign liabilities and funding structure: - Measures since Spring 2022 reduced exposure to short-term FX non-resident deposits. - Completion of WC-related projects and hydrocarbon windfalls reduced public sector credit demand and provided liquidity. - Banks’ exposure to overall foreign liabilities remains high relative to foreign assets; foreign asset-liability mismatches, especially short maturities, warrant vigilance. - Staff recommendations to strengthen resilience: - QCB to continue strengthening risk-based supervision and implement a financial safety net with deposit insurance and a recovery and resolution framework (IMF TA requested). - Diligent implementation of macroprudential measures for real estate exposures. - For SME loans taken over by QDB under the National Response Guarantee Program: assess SME viability and recognize NPLs promptly. - Proactive monitoring of provisioning and capital compliance; require plans to handle NPLs and restore capital buffers. - Regular stress testing and information sharing among supervisors; recommend an FSAP update once QCB initiatives largely completed (last FSAP in 2007). - Domestic market deepening and policy mix: - Promote term savings, broaden borrowing and investment opportunities, and greater financial inclusion to reduce reliance on short-term foreign liabilities. - Maintain fiscal discipline to moderate banks’ funding needs and avoid crowding out private credit. - Macroprudential/CFM measures introduced in 2022 align with IMF Institutional View; higher RRs on short-term FX non-resident asset-liability mismatches welcomed and recommended for regular review. - Fintech and green finance: - QCB launched National Fintech Strategy in March 2023; exploring wholesale CBDC and requested IMF assistance. - QCB working on ESG policies, reporting, risk management including climate stress tests. *Source: IMF staff report excerpt.* ### Exchange Rate Peg, External Position, and Monetary Policy - Exchange rate and external assessment: - Riyal pegged to the U.S. dollar at 3.64 since July 2001. - Staff assessment: external position in 2022 substantially stronger than level implied by medium-term fundamentals due to elevated hydrocarbon prices. - EBA-Lite CA regression model suggests a positive CA gap of 8.1 percent of GDP for 2022; REER regression model suggests a negative CA gap of 4.1 percent of GDP (elasticity 0.3). - NEER appreciated by 7 percent at end-2022 since end-2021; as of October 2023 REER was 1.1 percent above 2022. - EBA-lite REER model suggests an overvaluation of 11.9 percent; based on CA gap staff assesses REER undervalued by 23.6 percent; staff relies on current account approach given the peg. - Reserves and broader assets: - QCB reserves at end-2022: US$47.4 billion (increase of US$6.9 billion in 2022). - Reserves as share of indicators (end-2022): 20 percent of GDP; 7.5 months of prospective imports; 24.1 percent of broad money; 172.9 percent of short-term external debt. - Reserves relative to IMF ARA: estimated 52 percent of ARA (up from 49 percent in 2021). - QIA estimated foreign assets at end-2022: 176.9 percent of GDP. - Combined QCB reserves and QIA assets account for 508 percent of the ARA metric. - Monetary policy effectiveness and guidance: - Exchange rate peg continues to serve as a credible monetary anchor. - Staff supported domestic monetary policy tightening in line with the U.S. Fed and enhanced liquidity management with T-bill issuance. - Advice for greater independence over time: strengthen liquidity management and coordination among fiscal authorities, the QIA, and the QCB; deepen domestic financial markets; maintain low currency mismatches. - QCB requested IMF TA to enhance liquidity forecasting and management. *Source: IMF staff report excerpt.* ### Macroeconomic Projections and Key Indicators (selected series) - Nominal GDP (billions of Qatari Riyals): 2019: 642.0; 2020: 525.7; 2021: 654.2; 2022: 860.0; 2023: 853.7; 2024: 888.2; 2025: 919.7; 2026: 982.4; 2027: 1,054.9; 2028: 1,097.8. - Real GDP (2018 prices, percent change): 2019: 0.7; 2020: -3.6; 2021: 1.6; 2022: 4.2; 2023: 1.6; 2024: 1.9; 2025: 2.0; 2026: 5.9; 2027: 7.6; 2028: 3.4. - CPI inflation (average): 2019: -0.9; 2020: -2.5; 2021: 2.3; 2022: 5.0; 2023: 2.8; 2024: 2.4; 2025: 2.2; 2026: 2.2; 2027: 2.0; 2028: 2.0. - Brent crude oil price (U.S. dollars per barrel): 2019: 64.2; 2020: 43.3; 2021: 70.8; 2022: 99.0; 2023: 82.7; 2024: 80.1; 2025: 76.5; 2026: 73.4; 2027: 71.1; 2028: 69.4. - Natural Gas exports (millions of tons per year): 2019: 92.3; 2020: 91.5; 2021: 90.7; 2022: 91.1; 2023: 94.6; 2024: 97.0; 2025: 99.0; 2026: 115.0; 2027: 139.0; 2028: 147.4. - Central government fiscal balance (percent of GDP): 2019: 1.0; 2020: -2.1; 2021: 0.3; 2022: 10.6; 2023: 7.6; 2024: 7.2; 2025: 5.4; 2026: 4.9; 2027: 5.1; 2028: 4.4. - Central government debt (percent of GDP): 2019: 62.1; 2020: 72.6; 2021: 58.4; 2022: 42.5; 2023: 39.4; 2024: 37.4; 2025: 36.0; 2026: 34.9; 2027: 33.3; 2028: 32.9. - Current account (billions of U.S. dollars): 2019: 4.3; 2020: -3.0; 2021: 26.3; 2022: 63.1; 2023: 41.2; 2024: 38.5; 2025: 31.7; 2026: 32.3; 2027: 37.8; 2028: 36.4. - Central bank reserves (billions of U.S. dollars): 2019: 22.5; 2020: 28.3; 2021: 23.5; 2022: 20.1; 2023: 21.9; 2024: 22.4; 2025: 23.4; 2026: 24.1; 2027: 24.8; 2028: 25.6. - Financial soundness indicators (selected): - Regulatory Tier 1 capital to risk-weighted assets: 2022: 18.1; 2023Q1: 18.0; 2023Q2: 17.9. - Nonperforming loans to total loans: 2022: 3.6; 2023Q1: 3.7; 2023Q2: 3.8. - Return on assets: 2022: 1.4; 2023Q1: 1.6; 2023Q2: 1.5. - Liquid assets to total assets: 2022: 26.3; 2023Q1: 25.2; 2023Q2: 25.4. *Source: IMF staff report chapter excerpt.* ### External Position, Current Account and Reserves (key figures) - 2022 current account surplus: 26.7 percent of GDP. - 2023H1 current account surplus (level): US$20.3 billion. - Projected current account surplus: 17.6 percent of GDP in 2023; around 10 percent of GDP in the medium-term. - QCB reserves level at end-2022: US$47.4 billion. - Reserves as share of indicators (end-2022): 20 percent of GDP; 7.5 months of prospective imports; 24.1 percent of broad money; 172.9 percent of short-term external debt. - QIA estimated foreign assets at end-2022: 176.9 percent of GDP. - Combined QCB reserves and QIA assets account for 508 percent of the ARA metric. *Source: IMF staff report chapter excerpt.* ### Risk Assessment Matrix — Key Risks and Recommended Policy Responses - High likelihood / Medium impact: Intensification of regional conflict(s). - Policy response: fiscal space available; central bank to provide liquidity if needed; close monitoring of financial institutions. - High likelihood / High impact: Commodity price volatility. - Policy response: implement transparent medium-term fiscal and debt management framework; broaden revenue base; accelerate structural reforms. - Medium likelihood / Medium impact: Abrupt global slowdown or recession. - Policy response: fiscal space to respond; anchor fiscal policy in a medium-term framework; monitor banking sector; accelerate structural reforms. - Medium likelihood / High impact: Cyberthreats. - Policy response: National Cybersecurity Agency (established 2021) and revamped Cybersecurity Strategy; close monitoring and supervision of banking and payment systems. - Medium likelihood / Medium impact: Real estate market weakness. - Policy response: step up surveillance of property sector; monitor banking sector and recognize NPLs promptly; maintain capital buffers, liquidity and provisioning; fiscal space available to contain threats. *Source: IMF staff report chapter excerpt.* ### Structural Reforms, Labor Market and Digitalization - Structural reform priorities: - Boost productivity and inclusiveness; foster a more conducive business environment; leverage digitalization and climate actions. - Labor market and human capital measures recommended: - Attract more skilled expatriates; modernize visa and work permit system; provide pension schemes and social safety nets; strengthen retraining and education outcomes. - Incentivize private sector employment among Qatari nationals: over 90 percent of employed Qataris work for the public sector. - Raise female labor force participation: female participation rose 9 ppts over the last decade but remains more than 30 ppts below males. - Digitalization: - National Cyber Security Agency established; FinTech strategy launched early-2023. - EDAI and GovTech progress: Qatar ranks in the top 30 globally on GovTech Maturity Index and third among GCC countries as of 2022. - Up to 70 percent of transactions for services available online today are still conducted offline (Qatar E-Government Strategy, 2020). *Source: IMF staff report chapter excerpt.* ### Annex I — Qatar’s Natural Gas: Position and Prospects (selected findings) - Qatar endowed with 13 percent of the world’s total reserves; third largest by reserve volume. - Around 85 percent of Qatar’s natural gas export is LNG. - North Field expansion expected to increase Qatar’s LNG production capacity by around 65 percent by 2028. - Qatar’s largest five customers represent around 60 percent of total LNG exports; Asia represents over 70 percent. - Average duration of active contracts lengthened to 20 years in the first half of 2023. - Approximately 66 million tons of LNG will see contracts end during 2024–34; unsigned LNG volume would account for around 50 percent of total production volume by 2030 without new contracts. - Contract indexation: as of 2023 around 80 percent of Qatar’s active contracts with disclosed indexation was tied to crude oil prices. - Golden Pass Export Project (U.S.), 70 percent owned by QatarEnergy, expected full export capacity of approximately 16 mtpa by 2026, with first train operational by 2024. - Global LNG export capacity projected to increase from 500 MTPA to around 700-900 MTPA by 2030. - Contracting activity: in the past three years Qatar signed agreements averaging 12.9 million tons per year; during 2024–34 an average of 6 MTPA will expire each year. - Qatar investing in carbon capture and storage as a climate-sensitive supplier. *Source: Annex I. Qatar’s Natural Gas: Global Positioning and Prospects.* ### Annex VI — Fiscal and Debt Sustainability Assessment (selected results) - Overall risk of sovereign stress: Low. - Sustainability assessment: "Sustainable with high probability". - Debt stabilization in the baseline: Yes. - Baseline public debt (percent of GDP): Actual 2022: 42.5; 2023: 39.4; 2024: 37.5; 2025: 36.2; 2026: 35.2; 2027: 33.7; 2028: 33.5; 2029: 32.6; 2030: 31.2; 2031: 30.2; 2032: 29.4. - Staff commentary: "The public debt ratio is projected to progressively decline reflecting sizeable primary surpluses and stable economic conditions." - Renewable energy investment package 2024–35: - Cumulative investment cost: USD 14 billion, QR 50 billion, or 5.6 percent of 2024 GDP. - Target: bring share of renewable electricity to 30 percent by 2035 (baseline 5 percent). - Estimated near-term growth impact on real non-hydrocarbon GDP growth: increase between 0.53 to 0.67 ppts in 2024. - Green investment multipliers estimated in range 1.1–1.5; fossil fuel energy investment multiplier around 0.5. *Source: Fund staff.* *Source: IMF staff report excerpt.* ### 1. State of the Real Estate Sector in Qa ### 1. State of the Real Estate Sector in Qa ### Key findings on market developments - Excess supply in the real estate market has pushed related price indicators further down after the WC. - The real estate price index has remained weak since 2017 and equity prices of the sector underperformed the main index. - Excess supply became more acute after the WC as demand weakened and supply continued to increase in 2023Q1 when developments reserved for the WC were released to the market. - There are broader signs of weakening property markets even though prime segments perform better: - Residential sales volume contracted by 26 percent in 2022, and another 36 percent in 2023 through April. - Rents have normalized after the WC as a number of apartments became available to lease, with incentives such as one-month rent free returning. - Hotel occupancy fell to somewhat above 50 percent in the first several months of 2023. - Revenue per available room has moderated. - Office rents in key districts have progressively declined in the past decade, though prime properties have held up better in recent quarters. - Retail rents have continued to fall amid new supply; overall vacancy across Qatar’s main retail malls has risen to above 20 percent in the past decade, even though some prime developments enjoy full occupancy. ### Macroeconomic and financial transmission - Real estate market weaknesses could impact the wider economy through construction and hospitality. - Real estate and contractors represent 1/5 of the stock of bank lending. - Credit supply to the real estate sector accelerated in 2023. - If financing conditions remain tight for longer, asset quality from exposure to real estate could be further pressured. - Banks are reasonably prepared: real estate firms’ median interest coverage ratio improved in 2021, and banks have provisioned for related exposures. ### Policy measures and demand support - Since early-2023, measures to enhance oversight and stimulate demand include: - Updated law regulating the real estate sector. - Launch of the Real Estate Platform to collect and centralize data. - Establishment of the Real Estate Regulatory Authority to strengthen regulation. - Refinement of macroprudential measures to enhance risk control of bank lending to the real estate sector. - Other initiatives: the residency program, mortgage for expatriates, and tourism promotion. - Tourism strategy targets and actions: - The National Tourism Sector Strategy aims to attract over 6 million visitors per year by 2030 (2.6 million in 2022). - Proper implementation of the National Tourism Sector Strategy—enhancing governance, planning, regulations, capacity building, and diversification of products and services—is important. - Measures with low complexity and high impact, such as simplifying visa procedures, could be prioritized. ### Implications and near-term outlook - Continued capital expenditure by the state provides some support to the construction sector. - Proper implementation of regulatory, macroprudential, and tourism-related measures should help enhance risk monitoring and mitigation of the sector and increase related demand. *Sources: Bloomberg, Haver, and IMF staff calculations.* ### 11. Continued policy prudence and further reform momentum would allow Qatar to ### 11. Continued policy prudence and further reform momentum would allow Qatar to ### A. Balancing Fiscal Discipline with Aspirations for Transformation - Context and recent stance - Broad fiscal prudence maintained in 2022–23 amid significant hydrocarbon windfalls. - Fiscal stance tightened in 2022 (counter-cyclical fiscal policy) with the non-hydrocarbon primary balance (NHPB) improving by about 3 ppts of non-hydrocarbon GDP from 2021. - The 2023 wage bill rose by 8 percent above both budget and the 2021 level, mainly reversing pandemic cuts; this was mostly offset by lower capital expenditure. - The 2023 budget envisages cuts in both capital and other current expenditure, with the wage bill kept unchanged. - Total expenditure through 2023Q3 was somewhat above that implied by the budget; staff projects moderate fiscal consolidation to continue in 2023. - The 2023 NHPB is estimated to be broadly in line with the Permanent Income Hypothesis (PIH) benchmark. - Near-term guidance - The 2024 budget (to be released in December 2023) is set to assume a conservative oil price and contained public spending. - If the growth slowdown sharpens, some fiscal space could be deployed through productive and efficient spending to moderate the downturn while maintaining broad fiscal prudence. Possible uses: - Targeted support to vulnerable households and SMEs. - Frontloading planned investment in smaller-scale community infrastructure projects to provide near-term support to the construction sector. - Avoid additional fiscal cost (including contingent liabilities) to support unviable firms. - Medium-term strategy and projections - The ongoing update of Qatar’s medium-term budget (covering a 5-year period for the first time to support NDS3 implementation) is an opportunity to recalibrate the medium-term strategy. - Assuming continued spending discipline, central government debt is projected to gradually decline to close to 30 percent of GDP by 2028 (Annex VI). - MTFF recommendations: - The updated medium-term budget should be informed by credible macroeconomic projections with a PIH-based fiscal anchor (with a view to eventually introducing a fiscal rule) and preserve priority spending. - MTFF should provide a top-down aggregate expenditure ceiling for bottom-up budgeting, preferably linked to performance, and be integrated into the annual budget process. - Complement MTFF with regular fiscal risk assessments and an MTFF monitoring tool to assess compliance during budget execution. - Develop a more comprehensive sovereign asset-liability management framework encompassing the general government, including the QIA and government-related enterprises (GREs). - Policy priorities and reform measures (staff recommendations) - Sustaining prudent and countercyclical policy: - Adhere to a PIH-based fiscal anchor with realistic price assumptions and maintain sufficient fiscal buffers against external shocks. - Update the fiscal anchor periodically alongside the changing hydrocarbon price outlook. - Introducing the VAT: - A broad-based VAT introduction is recommended to modernize the tax system and lay the foundation for greater revenue diversification. - An introductory rate of 5 percent as per the GCC agreement would bring revenue up to 1½ percent of GDP (and increase non-hydrocarbon revenue to around 20 percent of total revenue). - The impact on inflation is estimated to be limited and transitory. - Targeted transfers to vulnerable households can be considered to enhance social support. - Broadening the CIT: - Speedy implementation of the global minimum corporate income tax (CIT) would help increase non-hydrocarbon revenues further. - Consider a CIT for domestic firms at an appropriate threshold. - Rationalizing the public wage bill: - Enhance public wage bill efficiency; link headcount increases closely to efficient provision of new public services. - Continue efforts to contain the public wage bill, including tightening eligibility for benefits and reducing staffing by natural attrition. - Continuing subsidy reforms: - Further reforms could include lifting caps on gasoline and diesel prices and gradually phasing out remaining subsidies for food, natural gas, electricity, and water, with targeted support to the vulnerable. - Further subsidy reduction will generate fiscal savings, promote efficient energy and water consumption, and support climate ambition. - Reorienting spending toward enabling private sector-led growth: - Reorient spending from traditional physical infrastructure to reforms boosting productivity, economic diversification, and climate sustainability. - Focus public investment on improving human capital (for nationals and expatriates), a more conducive business environment, enhancing climate sustainability, and adapting to the energy transition. - Further investment in climate adaptation and renewable energy is critical for emission reduction targets and economic gains. - Enhancing public investment efficiency: - Undertake the Public Investment Management Assessment (PIMA) and/or Climate-PIMA. - Investment in human capital (education and health) is a budget priority; scope exists to improve efficiency in both sectors. - Crowd in private investment with high investment efficiency to further diversification. - Fiscal transparency and coordination - Broaden publication coverage from the central government to the general government and include more detailed information on fiscal operations and budget plans. - Improve reporting frequency, timeliness, granularity, and supporting analysis. - Improve transparency in public investment and procurement to enhance fiscal management and anti-corruption efforts. - Authorities’ views - Authorities affirmed commitment to fiscal discipline and broadly shared staff views. - Near-term: confident that a prudent but robust expenditure envelope would support growth and stressed avoiding support to unviable firms. - Medium-term: plan to finance key NDS3 initiatives by reorienting funds from infrastructure investment. - Preferred introducing VAT and/or other revenue diversification measures when domestic and global growth is more robust. - Highlighted substantial fiscal savings from previous energy subsidy reforms and openness to further reviewing the scope of energy subsidies. - Ongoing efforts to introduce program-based budgeting underpinned by performance-based indicators and an expenditure review program to enhance efficiency in sectors critical for NDS3 (education and health). ### B. Safeguarding Financial Stability amid Global Uncertainty - Banking sector resilience and near-term risks - Prudent QCB policies have helped maintain financial stability. - Banks have withstood the gradual exit from pandemic-era support and tightening financial conditions due to sizeable buffers and continued diligent supervision. - Emerging pressures on asset quality and profitability warrant close monitoring. - Nonperforming loan (NPL) ratios could edge up from pandemic-related loan restructures and as slower economic activity and tighter financial conditions strain debt service capacity. - Weakness in the real estate market is a potential source of NPLs. - High provisioning levels could weigh on bank profitability; weakening credit demand would reduce income. - Recent QCB stress tests show the banking system is resilient to severe shocks, though a few weaker banks would require recapitalization under those stress scenarios. - Foreign liabilities and funding structure - Tighter policy measures and lower funding needs reduced banks’ exposure to non-resident deposits. - Measures tightened since Spring 2022 to reduce exposure to short-term FX non-resident deposits. - Completion of WC-related projects and hydrocarbon windfalls reduced public sector credit demand and provided additional liquidity. - Bank holdings of non-resident deposits have declined significantly. - Banks’ exposure to overall foreign liabilities remains high, especially relative to banks’ foreign assets. - Foreign asset-liability mismatches, particularly with short maturities, warrant continued vigilance, especially under uncertain geopolitical and financial conditions, and as mismatches may increase when monetary policy starts to ease globally and/or hydrocarbon liquidity abates. - Staff recommendations to strengthen resilience - QCB should continue strengthening efforts to enhance banking sector resilience. - Ongoing initiatives welcomed: - Enhance risk-based supervision. - Establish a financial safety net with deposit insurance and a recovery and resolution framework (IMF technical assistance requested). - Diligent implementation of macroprudential measures to limit risks from real estate exposures is key. - For SME loans taken over by Qatar Development Bank (QDB) under the pandemic-era National Response Guarantee Program (offered at much lower interest rates and extended maturities), it is critical to: - Diligently assess SMEs’ viability. - Recognize NPLs promptly. - QCB should proactively monitor banks’ compliance with provisioning and capital requirements, and require plans to handle NPLs and restore capital buffers as needed. - Regular stress testing and information sharing among financial supervisors recommended. - Staff recommended an FSAP update once QCB’s ongoing initiatives are largely completed (last FSAP concluded in 2007). - Domestic financial market deepening and policy mix - Domestic financial market deepening is critical to reduce banks’ exposure to short-term foreign liabilities. - Promote term savings, broaden borrowing and investment opportunities, and achieve greater financial inclusion to facilitate more stable domestic funding. - Continued fiscal discipline, including spending through GREs, will moderate banks’ funding needs and avoid crowding out credit to the private sector. - As domestic financial deepening takes time, macroprudential measures to mitigate risks from short-term foreign funding exposure may be needed. - Measures introduced in 2022 are both macroprudential and capital flow management measures (CFM/MPMs) and align with the IMF’s Institutional View. - The higher reserve requirements (RRs) on short-term FX non-resident deposits have recently been replaced by higher RRs on short-term FX non-resident asset-liability mismatches (relative to those with longer maturities); staff welcomed this more targeted, risk-based approach and recommended regular review to align with evolving risks. - Fintech and green finance initiatives - QCB launched the National Fintech Strategy in March 2023 based on four pillars: infrastructure, regulation, capacity development, and ecosystem development. - Important to align implementation guidelines with global best practices and ensure consistency with QCB’s mandate. - QCB is exploring the concept of a wholesale CBDC and has requested IMF assistance. - QCB is working on ESG policies, reporting framework, and risk management, including climate stress tests, to help financial institutions promote climate financing and manage associated risks. *Source: IMF staff report excerpt.* ### 23. Qatar has made significant progress on the technical compliance with the FATF ### 23. Qatar has made significant progress on the technical compliance with the FATF Standards. ### AML/CFT and FATF Mutual Evaluation - Qatar’s MENA FATF AML/CFT mutual evaluation was completed in February 2023. - Further improvements needed to enhance effectiveness of the AML/CFT framework to preserve financial sector and broader economic integrity and stability, including: - Enhance understanding of terrorism financing risks and ability to detect terrorism financing. - Improve intelligence gathering and prosecutorial efforts. - The FATF action plan should be implemented in a decisive and coordinated manner, with progress reported back to the FATF within a year. ### Authorities’ Views on AML/CFT and Financial Sector Risks - Authorities supported staff’s call for continued vigilance. - Agreed on the need to continue monitoring and managing risks associated with banks’ short-term foreign asset-liability mismatches. - Noted efforts in deepening domestic financial markets. - Highlighted progress in risk management, corporate governance, home-host coordination, and the early-warning framework in line with previous FSAP recommendations. - Stressed remaining key areas are being strengthened with IMF technical assistance. - Shared staff’s views on FinTech, green financing and AML/CFT plans. - Noted the recently published Financial Sector Strategy covers several of the above areas and promotes greater digitalization of banking services and financial inclusion. ### Further Enhancing Monetary Policy Effectiveness - Exchange rate peg continues to serve Qatar well as a credible monetary anchor, especially with continued fiscal prudence and competitiveness-enhancing reforms. - Staff supported domestic monetary policy tightening in line with the U.S. Federal Reserve and enhanced liquidity management with T-bill issuance. - Monetary policy transmission appears to have improved, bringing interbank market rates more in line with the deposit policy rate. - Advice to pave the way for a more independent monetary policy in the long run: - Strengthen liquidity management and coordination among fiscal authorities, the QIA, and the QCB. - Deepen domestic financial markets. - Maintain low currency mismatches on balance sheets. - Staff welcomed the QCB’s request for technical assistance to enhance liquidity forecasting and management. ### Authorities’ Views on Monetary Policy - Authorities agreed with staff’s assessment on the exchange rate regime. - Welcomed IMF technical assistance to strengthen liquidity management. ### Accelerating Structural Reforms for Economic Transformation - Qatar is shifting from a traditional state-led growth model to a more dynamic, knowledge-based, and private sector-driven one. - Further reforms should focus on: - (i) boosting productivity and inclusiveness; - (ii) fostering a more conducive business environment; - (iii) leveraging progress in digitalization and climate actions for further diversification and growth. ### Human Capital and Labor Market Dynamics - Total factor productivity in the GCC is on a declining trend since the early-2000s, contrary to the trajectory in OECD commodity producers. - Recommended measures: - Attract more skilled expatriates by enhancing labor market mobility and safety nets. The expatriate labor reforms introduced during the pandemic are welcome first steps and should be fully implemented. Renewed Qatar-ILO collaboration for 2024-27 is encouraging. - Modernize the visa and work permit system; provide sufficient pension schemes and social safety nets; strengthen labor market dynamics and retraining for skill upgrade. - Improve education outcomes and align with private sector needs. Notes: - Education spending per student in Qatar is already among the highest in the world—the key is to enhance the efficiency of education spending to achieve better outcome. - Reforms can include performance-based compensation for teachers, more emphasis on early education, and partnerships with the private sector in curricula design and vocational training. - Incentivize private sector employment among Qatari nationals: - Over 90 percent of the employed Qataris work for the public sector. - Civil service reviews and performance-based compensation can help rationalize public employment and reduce the public-private wage gap. - Post-school entrepreneurial education and incentive schemes can encourage Qataris to join the private sector. - Expansion of the public pension scheme to Qataris working in the private sector came into effect in early-2023. - Raise female labor force participation: - Female labor participation rate has risen 9 ppts over the last decade, but it is still more than 30 ppts below that of males and below what is implied by its per-capita income level. - Suggested policies: facilitate female employment in more sectors, ensure equal remuneration as required by the Labor Law, workplace protection, paid parental leave, promote technology and engineering majors among female students, increase female representation in decision-making bodies, special entrepreneurship programs, accessible quality childcare, equal access to finance, female-friendly workplace policies, promote online job searches, virtual interviews and remote work. ### Business Environment Reforms - Notable progress made; future reforms should focus on: - Promoting further trade liberalization and competition: reduce non-tariff barriers, liberalize trade in services, promote free trade agreements, align trade regulations and taxes with the rest of the GCC, reduce entry barriers for foreign firms. - Easing access to finance, especially for SMEs: protect legal rights of borrowers and lenders; simplify insolvency procedures; strengthen credit reporting and creditor assessment tools; proper use of fintech. - Enhancing administrative efficiency: streamline business regulations and procedures, enhance transparency and accountability, refine and clarify legal and regulatory frameworks, deepen public sector digitalization, align fees with services provided. ### Growth Impact of a Comprehensive Reform Package (IMF FSGM Illustration) - Labor market reforms could have larger growth benefits than business environment improvements. - Within labor market reforms: measures to attract more skilled expatriates have the largest impact, followed by active labor market policies and increasing female labor force participation among Qataris. - Within business environment reforms: easing access to finance and lowering firms’ entry barriers for trade and competition could bring sizeable benefits. - Recommendation: implement a comprehensive, well-sequenced reform package prioritizing more impactful reforms and exploiting complementarities (e.g., governance, trade liberalization, product market reforms). ### Digitalization - Further digitalization will spur the transition to a knowledge-based economy. - Key points: - Establishment of the National Cyber Security Agency (NCSA). - Need to enhance digital skills at basic and advanced levels. - Continue public education on cyber security and strengthen cyber regulations to promote use and trust. - Digitalization provides an opportunity to attract top talent. - Box 2 highlights digital progress: - Qatar National Broadband Network, National Payment Gateway, e-Government 2020 Strategy (Qatar ranks in the top 30 globally on GovTech Maturity Index and third among GCC countries as of 2022). - FinTech strategy launched in early-2023 to build tech skills, foster innovation, engage with Big Techs, update payment service requirements, and expand sandbox participants. - Enhanced Digital Access Index (EDAI) constructed; cross-country analysis finds EDAI positively associated with financial inclusion and government effectiveness, and mitigates negative impact of crisis on bank profitability. - Up to 70 percent of transactions for services available online today are still conducted offline (Qatar E-Government Strategy, 2020). ### Climate Action and Green Transition - Accelerating climate adaptation and mitigation would enhance resilience and growth. - Initiatives guided by the National Environment and Climate Change Strategy and the National Climate Change Action Plan. - Policy priorities: - Gradually phase out remaining energy subsidies. - Increase green investment. - Deepen financial markets to promote climate financing. - Enhance interagency coordination and upgrade the regulatory framework. - Greening the economy expected to reduce carbon footprint, enhance resilience to climate stressors and the global energy transition, boost greener jobs, and promote sustainable tourism. ### Special Economic Zones and Incentives - Numerous special economic and free zones, industrial parks, warehousing and logistics parks, and the Qatar Financial Center established to attract FDI and boost trade. - Recommendations: - Use targeted and time-bound incentives with strict exit criteria and sunset clauses. - Promote stronger spillovers through backward and forward linkages. - Periodic cost-benefit assessments to rationalize incentives. - Ensure an appropriate regulatory setup with a strong governance framework to maintain a level playing field and ensure incentives do not substitute for broad-based structural reforms. ### Authorities’ Views on Structural Reforms and Women’s Economic Empowerment - Authorities emphasized commitment to ambitious structural reforms and highlighted progress in reforming the labor market, enhancing the business environment, and attracting FDI. - Agreed with staff’s call to gradually transition the state’s role from a direct growth driver to an enabler of private sector-led growth and to embed the strategy in NDS3. - On women’s economic empowerment, authorities considered the gap in labor force participation is not due to legal and regulatory barriers but rather to individual choice. ### Enhancing Statistics Collection and Provision - Qatar publishes essential macroeconomic data through a National Summary Data Page (NSDP) as a participant in the Enhanced General Data Dissemination System (e-GDDS). - While data coverage is broadly adequate and improvements have been made in national account statistics following IMF technical assistance, further efforts needed to enhance coverage, collection and granularity of fiscal, debt and external statistics, especially for the International Investment Position, FDI and portfolio investment. - Progress will help Qatar subscribe to the Special Data Dissemination Standard. ### Staff Appraisal: Outlook, Fiscal Strategy, and Financial Stability - Qatar has remained resilient to recent global shocks; economic outlook is favorable. - Output growth is normalizing following the 2022 World Cup-driven boom. - Medium-term outlook supported by significant expansion of LNG production in the North Field (NF) and expected gains from implementation of NDS3. - Risks are broadly balanced. - Fiscal strategy recommendations: - Balance discipline with growth in the near term; facilitate transition to diversified, private sector-led growth over the medium term. - If downside risks materialize, deploy fiscal space through productive and efficient spending while maintaining broad fiscal prudence. - Medium-term aims: sustain prudent and countercyclical policy, accelerate revenue diversification including via VAT introduction, enhance current expenditure efficiency by rationalizing wage bill and gradually removing remaining subsidies, and reorient expenditure from traditional infrastructure to reforms that facilitate private sector-led growth. - Anchor a medium-term fiscal framework around maintaining intergenerational equity and greater fiscal transparency. - Financial stability recommendations: - QCB should continue proactive supervision and regulation, supported by regular risk analysis and information sharing among financial supervisors. - Continue plans to deepen domestic capital markets and mitigate risks associated with banks’ exposure to short-term foreign funding; review regularly. - Carefully balance opportunities and risks of FinTech and green financing initiatives and put in place adequate regulations. - Authorities are encouraged to implement the FATF action plan decisively. *Source: IMF staff report chapter excerpt.* ### 39. The exchange rate peg continues to represent a credible monetary anchor. Qatar’s ### 39. The exchange rate peg continues to represent a credible monetary anchor. Qatar’s ### External position and monetary anchor - The exchange rate peg continues to represent a credible monetary anchor. - Qatar’s external position in 2022 was assessed to be substantially stronger than the level implied by medium-term fundamentals and desirable policies, mainly due to the elevated hydrocarbon prices. ### Liquidity management and financial vulnerabilities - Further efforts to strengthen liquidity management and coordination among the fiscal and monetary authorities are recommended. - Deepening domestic financial markets would further reduce vulnerabilities. - Maintaining low currency mismatches on bank balance sheets would further reduce vulnerabilities and enhance monetary policy transmission. ### Structural reforms and diversification - Reform efforts should be intensified to shift from a traditional state-led growth model to a more dynamic, knowledge-based, private sector-driven one. - Policy priorities to support this transition include: - Attracting more skilled expatriates. - Improving education outcome. - Incentivizing Qatari nationals to take up private sector jobs. - Raising female labor force participation. - Promoting further trade liberalization. - Easing access to finance. - Continuing to enhance administrative efficiency. - Implementation guidance: - These measures should be implemented comprehensively in a well-sequenced manner to boost potential growth. - Furthering digitalization and climate actions are also critical. - Broadening gains from economic zones and centers to the wider economy would accelerate economic diversification. *Source: IMF content unit 1qatea2024001 - paragraphs 39–40.* ### 41. It is proposed that the next Article IV consultation with Qatar take place on the ### It is proposed that the next Article IV consultation with Qatar take place on the standard 12-month cycle. ### Real sector developments - 2022 FIFA World Cup drew a large number of visitors to Qatar, boosting non-hydrocarbon growth in 2022 and supported by capital formation. - Average Monthly Visitors in November/December (In thousands): chart scale shows up to 1,200 (no single value to quote beyond axis). - Real GDP growth (percent, year on year) and PMI: Real GDP growth and PMI series for 2017–2023 indicate expansion with PMI above 50 interpreted as expansion. - Contributions to Output Growth (Percentage point): hydrocarbon and non-hydrocarbon components shown for 2016–2022. - Employment changes (Change from 2013Q1 to 2022Q4): Female employment rose across nationalities over the last decade; male employment changed little. - Real estate prices weakened further after the World Cup (Real Estate Prices index: Peak in late-2015 = 100). ### Inflation and monetary policy - Policy deposit rate broadly followed the US Fed funds rate; local policy rates have closed gaps. - Monetary policy transmission improved after QCB mopped up liquidity more effectively. - Consumer Price Inflation (Percent, year on year): Qatar series compared with Global median (ex-Qatar) and GCC median (ex-Qatar) for 2016–2022; inflation rose in 2022. - Money Supply (Percent, year on year): money growth also rose in 2022 amid strong economic performance. - Inflation expectations: Inflation is expected to moderate to around 2 percent in the medium term (Median Consensus Forecasts series, percent year on year). - Indicator of Inflation Uncertainty: smaller divergence in analyst forecasts; one-standard-deviation bands shown (2023Q4 estimate implied by Q3 performance). ### External sector developments - Effective exchange rates: After appreciating for 2 years to end-2022, NEER/REER have weakened (2010 average = 100). - Oil and natural gas price indices (2010-12 = 100): key hydrocarbon prices were volatile; natural gas (Henry Hub), natural gas (Dutch TTF), and oil indices depicted. - Current account: The current account surplus surged in 2022 on the back of strong LNG export revenue. - QCB reserves rose in 2022 relative to short-term external debt. - Exchange rate forwards have traded in a narrow range (Dollar-cross Exchange Rate Forwards, percent deviation from parity, one month tenor). ### Fiscal sector developments - Central government fiscal balance: Fiscal surplus rose in 2022 from close to zero as LNG-related revenue rose and expenditure (percent of GDP) fell, particularly capital spending and wages. - Central government gross debt continued to fall towards the target of sub-40 percent of GDP. - State financial assets estimated to be invested globally by sovereign wealth fund QIA, supporting tight sovereign credit spread (Sovereign Credit Default Swap Spreads: Qatar compared with Saudi Arabia and EM). ### Credit and financial sector developments - Real credit growth remained around zero. - Key drivers of bank lending growth shifted from public sector to real estate and services. - Non-resident deposits continued to decline; partly replaced by borrowing from banks abroad and public sector resident deposits. - Bank profitability recovered (ROE and ROA series; Bank Profitability percent, 2023Q1 shown). - Banking vulnerability index for GCC (ex-Bahrain) indicates spillover risk in Qatari banking system has edged up recently. ### Real estate sector indicators - Sales of residential houses have slowed (Number of Residential Houses Sold: Percent year on year, Jan-Aug 2023). - Housing rents started to normalize (Housing Rents period average = 100). - Hotel room supply has risen while occupancy fallen (Room supply in thousands; Occupancy percent, September 2023). - Median ICR of Qatari real estate firms rose in 2021 from around 2. - Revenue of construction companies (In millions of Qatari riyal, 2008-21): series for Large firms (50+ employment) and Small firms (<50 employment) show diverging trends; smaller construction companies continued to weaken. - Real estate and contractors represent an important share of total bank lending (Bank Domestic Credit By Industry, Percent, August 2023). ### Key macroeconomic projections and indicators (Table 1, selected series, 2019–28) - Nominal GDP (billions of Qatari Riyals): 2019: 642.0; 2020: 525.7; 2021: 654.2; 2022: 860.0; 2023: 853.7; 2024: 888.2; 2025: 919.7; 2026: 982.4; 2027: 1,054.9; 2028: 1,097.8. - Real GDP (2018 prices, percent change): 2019: 0.7; 2020: -3.6; 2021: 1.6; 2022: 4.2; 2023: 1.6; 2024: 1.9; 2025: 2.0; 2026: 5.9; 2027: 7.6; 2028: 3.4. - CPI inflation (average): 2019: -0.9; 2020: -2.5; 2021: 2.3; 2022: 5.0; 2023: 2.8; 2024: 2.4; 2025: 2.2; 2026: 2.2; 2027: 2.0; 2028: 2.0. - Brent crude oil price (U.S. dollars per barrel): 2019: 64.2; 2020: 43.3; 2021: 70.8; 2022: 99.0; 2023: 82.7; 2024: 80.1; 2025: 76.5; 2026: 73.4; 2027: 71.1; 2028: 69.4. - Natural Gas exports (millions of tons per year): 2019: 92.3; 2020: 91.5; 2021: 90.7; 2022: 91.1; 2023: 94.6; 2024: 97.0; 2025: 99.0; 2026: 115.0; 2027: 139.0; 2028: 147.4. - Central government fiscal balance (percent of GDP): 2019: 1.0; 2020: -2.1; 2021: 0.3; 2022: 10.6; 2023: 7.6; 2024: 7.2; 2025: 5.4; 2026: 4.9; 2027: 5.1; 2028: 4.4. - Central government debt (percent of GDP): 2019: 62.1; 2020: 72.6; 2021: 58.4; 2022: 42.5; 2023: 39.4; 2024: 37.4; 2025: 36.0; 2026: 34.9; 2027: 33.3; 2028: 32.9. - Broad money (change in percent): 2019: 2.5; 2020: 3.8; 2021: 1.4; 2022: 17.4; 2023: 2.9; 2024: 4.1; 2025: 4.6; 2026: 4.6; 2027: 4.4; 2028: 4.4. - Central Bank's official reserves (billions of U.S. dollars): 2019: 22.5; 2020: 28.3; 2021: 23.5; 2022: 20.1; 2023: 21.9; 2024: 22.4; 2025: 23.4; 2026: 24.1; 2027: 24.8; 2028: 25.6. ### Balance of payments projections (Table 2, selected series, 2019–28) - Current account (billions of U.S. dollars): 2019: 4.3; 2020: -3.0; 2021: 26.3; 2022: 63.1; 2023: 41.2; 2024: 38.5; 2025: 31.7; 2026: 32.3; 2027: 37.8; 2028: 36.4. - Exports (billions of U.S. dollars): 2019: 72.9; 2020: 49.1; 2021: 58.7; 2022: 131.0; 2023: 111.5; 2024: 111.0; 2025: 108.0; 2026: 115.3; 2027: 128.3; 2028: 131.5. - Hydrocarbon exports (billions of U.S. dollars): 2019: 62.9; 2020: 47.2; 2021: 75.1; 2022: 115.0; 2023: 98.0; 2024: 97.6; 2025: 94.7; 2026: 101.5; 2027: 113.5; 2028: 116.5. - LNG (billions of U.S. dollars): 2019: 37.9; 2020: 30.5; 2021: 35.3; 2022: 60.8; 2023: 55.6; 2024: 56.2; 2025: 55.0; 2026: 62.0; 2027: 73.2; 2028: 76.2. - Imports (billions of U.S. dollars): 2019: 37.9; 2020: 40.9; 2021: 34.1; 2022: 31.5; 2023: 32.2; 2024: 32.7; 2025: 33.4; 2026: 33.7; 2027: 34.9; 2028: 34.7. - Overall balance (billions of U.S. dollars): 2019: 9.4; 2020: 0.5; 2021: 1.1; 2022: 6.9; 2023: 4.0; 2024: 3.2; 2025: 4.5; 2026: 5.9; 2027: 6.8; 2028: 5.4. - Change in QCB reserves (- increase) (billions of U.S. dollars): 2019: -9.4; 2020: -0.5; 2021: -1.1; 2022: -6.9; 2023: -4.0; 2024: -3.2; 2025: -4.5; 2026: -5.9; 2027: -6.8; 2028: -5.4. - Central bank reserves (billions of U.S. dollars) memorandum: 2019: 39.7; 2020: 40.9; 2021: 42.2; 2022: 47.4; 2023: 51.4; 2024: 54.6; 2025: 59.1; 2026: 65.0; 2027: 71.8; 2028: 77.2. ### Central government finance (Tables 3a and 3b, selected series, 2019–28) - Revenue (billions of Qatari Riyals): 2019: 214.7; 2020: 171.2; 2021: 193.7; 2022: 299.5; 2023: 269.3; 2024: 276.6; 2025: 271.8; 2026: 282.6; 2027: 299.0; 2028: 306.0. - Oil revenue (billions of Qatari Riyals): 2019: 41.0; 2020: 24.0; 2021: 43.4; 2022: 57.6; 2023: 42.4; 2024: 41.1; 2025: 39.2; 2026: 38.1; 2027: 37.7; 2028: 37.9. - LNG revenue (billions of Qatari Riyals): 2019: 35.4; 2020: 39.9; 2021: 56.3; 2022: 118.2; 2023: 95.7; 2024: 111.3; 2025: 108.2; 2026: 119.7; 2027: 128.9; 2028: 131.5. - Investment income from public enterprises (billions of Qatari Riyals): 2019: 90.3; 2020: 64.2; 2021: 55.4; 2022: 74.3; 2023: 81.8; 2024: 73.8; 2025: 74.5; 2026: 73.8; 2027: 79.0; 2028: 80.3. - Expenditure (billions of Qatari Riyals): 2019: 208.4; 2020: 182.4; 2021: 191.9; 2022: 208.7; 2023: 204.0; 2024: 212.3; 2025: 221.7; 2026: 234.3; 2027: 245.6; 2028: 257.5. - Compensation of employees (billions of Qatari Riyals): 2019: 61.4; 2020: 57.9; 2021: 58.7; 2022: 62.9; 2023: 64.0; 2024: 67.5; 2025: 69.9; 2026: 74.7; 2027: 80.2; 2028: 83.5. - Net acquisition of nonfinancial assets (billions of Qatari Riyals): 2019: 84.3; 2020: 66.5; 2021: 72.3; 2022: 75.3; 2023: 70.8; 2024: 71.9; 2025: 74.5; 2026: 77.1; 2027: 76.8; 2028: 78.5. - Net lending(+)/borrowing(-) (billions of Qatari Riyals): 2019: 6.3; 2020: -11.2; 2021: 1.8; 2022: 90.8; 2023: 65.3; 2024: 64.3; 2025: 50.1; 2026: 48.3; 2027: 53.3; 2028: 48.5. - Central government total debt (mem.): 2019: 398.6; 2020: 381.7; 2021: 382.0; 2022: 365.3; 2023: 336.0; 2024: 331.9; 2025: 331.1; 2026: 342.7; 2027: 351.5; 2028: 360.8. ### Monetary survey (Table 4, selected series, 2019–28) - Broad Money (billions of Qatari Riyals): 2019: 578.0; 2020: 599.9; 2021: 608.5; 2022: 714.5; 2023: 735.3; 2024: 765.8; 2025: 800.6; 2026: 837.8; 2027: 875.1; 2028: 914.0. - Net foreign assets (Total, billions of Qatari Riyals): 2019: -155.0; 2020: -254.7; 2021: -316.8; 2022: -228.9; 2023: -205.4; 2024: -186.4; 2025: -172.8; 2026: -159.6; 2027: -148.6; 2028: -148.9. - Net domestic assets (Total, billions of Qatari Riyals): 2019: 733.0; 2020: 854.6; 2021: 925.3; 2022: 943.3; 2023: 940.8; 2024: 952.2; 2025: 973.4; 2026: 997.5; 2027: 1,023.7; 2028: 1,062.9. - Reserve Money (billions of Qatari Riyals): 2019: 72.1; 2020: 101.2; 2021: 106.5; 2022: 98.9; 2023: 104.1; 2024: 109.1; 2025: 114.4; 2026: 120.4; 2027: 126.8; 2028: 133.0. - Broad money growth (M2): 2019: 2.5; 2020: 3.8; 2021: 1.4; 2022: 17.4; 2023: 2.9; 2024: 4.1; 2025: 4.6; 2026: 4.6; 2027: 4.4; 2028: 4.4. ### Financial soundness indicators (Table 5, selected series) - Regulatory Tier 1 capital to risk-weighted assets: 2016: 15.7; 2017: 16.5; 2018: 17.0; 2019: 17.5; 2020: 17.6; 2021: 18.0; 2022: 18.1; 2023Q1: 18.0; 2023Q2: 17.9. - Nonperforming loans to total loans: 2016: 1.3; 2017: 1.6; 2018: 1.9; 2019: 1.8; 2020: 2.0; 2021: 2.4; 2022: 3.6; 2023Q1: 3.7; 2023Q2: 3.8. - Return on assets: 2016: 1.7; 2017: 1.5; 2018: 1.6; 2019: 1.6; 2020: 1.4; 2021: 1.4; 2022: 1.4; 2023Q1: 1.6; 2023Q2: 1.5. - Liquid assets to total assets: 2016: 29.6; 2017: 28.2; 2018: 29.1; 2019: 30.2; 2020: 28.1; 2021: 28.2; 2022: 26.3; 2023Q1: 25.2; 2023Q2: 25.4. ### Vulnerability indicators (Table 6, selected series) - Total debt (billion US$, including commercial banks): 2016: 193.0; 2017: 166.3; 2018: 198.2; 2019: 242.6; 2020: 270.1; 2021: 290.1; 2022: 274.0. - Total debt (percent of GDP): 2016: 127.2; 2017: 103.2; 2018: 108.1; 2019: 137.6; 2020: 187.0; 2021: 161.5; 2022: 115.9. - Central bank net reserves (US$b): 2016: 31.4; 2017: 14.5; 2018: 30.1; 2019: 39.4; 2020: 40.6; 2021: 40.8; 2022: 46.1. - Foreign currency deposits/total deposits (percent): 2016: 25.6; 2017: 37.3; 2018: 36.1; 2019: 27.9; 2020: 28.2; 2021: 29.8; 2022: 36.4. - Moody's investor services long-term foreign currency rating: series shows transition from Aa2 to Aa3 across 2016–2022. *International Monetary Fund staff report and staff calculations, Qatar country chapter (figures and tables as provided).* ### Annex I. Qatar’s Natural Gas: Global Positioning and Prospects ### Annex I. Qatar’s Natural Gas: Global Positioning and Prospects ### Global role of natural gas and Qatar’s position - Natural gas’s share rose by 2 ppts to 23 percent of total energy supply by 2021; renewables rose by 4 ppts to 12 percent. Oil and coal each fell by 2–3 ppts from 2010 to 2021. - The U.S. was the largest natural gas producer, representing 23 percent of total in 2021; Russia produced somewhat below 20 percent of total. - Iran, China, Canada, Qatar, Australia, and Norway represented 3–5 percent of total each. - Qatar is endowed with 13 percent of the world’s total reserves and is the third largest in terms of reserve volume; by 2050, Qatar may still have century-long reserves while some producers already deplete reserves. ### LNG exports, capacity, and infrastructure - Around 85 percent of Qatar’s natural gas export is LNG. - At its peak, Qatar accounted for one-third of global LNG exports; Qatar’s share declined to around one-fifth of global LNG exports in 2022. - The Dolphin Gas project: pipeline gas to the UAE accounted for 15 percent of Qatar's total gas exports in 2022. - The ongoing North Field (NF) expansion project is expected to increase Qatar’s LNG production capacity by around 65 percent by 2028. - Nakilat manages the world’s largest LNG shipping fleet by capacity; QatarEnergy has reportedly reserved construction slots with all major Korean shipyards with the intent to grow the fleet to over 100 carriers. ### Export destinations and diversification - Qatar’s largest five customers represent around 60 percent of the nation’s total LNG exports, less concentrated than Russia and Australia. - Asian countries represent over 70 percent of Qatar’s total LNG exports (China, India, Korea, and Japan). ### Contracts, pricing, and contract expirations - Qatar predominantly relies on contract-based LNG delivery; the U.S. allocates over half of its volume as spot deliveries. - Average duration of active contracts (contracts with length >= 5 years) increased globally from 12 years in 2020 to 18 years in 2022; Qatar’s contract duration lengthened to 20 years in the first half of 2023. - Approximately 66 million tons of LNG will see their contracts end during 2024–34; without new contracts, the unsigned LNG volume will account for around 50 percent of the total production volume by 2030. - As of 2023, around 80 percent of Qatar’s active contracts with disclosed indexation was tied to crude oil prices, compared to around 60 percent globally. - Qatar’s natural gas export prices are closely correlated with crude oil prices with a lag. ### Near-term projects and global capacity outlook - Golden Pass Export Project in the U.S., 70 percent owned by QatarEnergy, is expected to have a full export capacity of approximately 16 mtpa of LNG by 2026, with the first LNG train operational by 2024. - Globally, LNG export capacity is projected to increase from 500 MTPA to around 700-900 MTPA by 2030, driven by the U.S., Qatar, and Russia. ### Demand-side uncertainty and risks - Medium-term LNG demand is subject to two-sided uncertainty: - Upside: Europe’s shift from pipeline to LNG amid energy security concerns; natural gas defined as green energy by the EU and acting as back-up for renewables. - Downside: Elevated costs and price volatility of LNG relative to other fuels; uncertain growth paths in emerging economies; global momentum toward carbon-neutrality by mid-century could reduce LNG demand. - Example risk comparison: thermal coal prices have historically traded in a lower range than LNG and exhibit less price volatility. ### Factors mitigating transition risks for Qatar - Qatar’s LNG-focused export structure aligns with a potential global shift away from high-emission fossil fuels toward LNG as a transition fuel. - Cost advantages in large natural gas fields enhance competitiveness. - Strategic control over the export value chain and shipping fleet increases reliability and mitigates shipping-cost volatility. - Contracting activity: In the past three years, Qatar has signed agreements averaged to 12.9 million tons per year; during 2024–34, an average of 6 MTPA will expire each year. At the current pace of signing, Qatar is on track to renegotiate expired volumes and accommodate additional volumes expected between 2025 and 2028. - Qatar is investing in carbon capture and storage as a climate-sensitive supplier. *Source: Annex I. Qatar’s Natural Gas: Global Positioning and Prospects* ### 197.3 percent of GDP. On the liabilities side, the authorities have reined in public debt and commercial ### 1qatea2024001 - 197.3 percent of GDP. On the liabilities side, the authorities have reined in public debt and commercial ### Current account and external position - 2022 current account surplus: 26.7 percent of GDP (9-year high). - Drivers in 2022: higher hydrocarbon prices; exceptionally strong tourism related to the World Cup. - 2023H1 current account surplus (level): US$20.3 billion. - Projected current account surplus: 17.6 percent of GDP in 2023; around 10 percent of GDP in the medium-term, supported by LNG production expansion in the North Field and elevated (although gradually declining) hydrocarbon prices. - Staff assessment for 2022: external position substantially stronger than level implied by fundamentals and desirable policies; EBA-Lite CA regression model suggests a positive CA gap of 8.1 percent of GDP; REER regression model suggests a negative CA gap of 4.1 percent of GDP (elasticity of 0.3). Staff relies on the current account approach given the currency peg. - Cyclical adjustment component: 4.9 percent of GDP (capturing part of hydrocarbon price increase). - Note: The authorities do not produce comprehensive IIP data. ### Real effective exchange rate (REER) and competitiveness - Nominal peg: Riyal pegged to the U.S. dollar at 3.64 since July 2001. - NEER movement: NEER at end-2022 appreciated by 7 percent since end-2021, with slight depreciation in the last quarter of 2022. - REER movement: REER appreciated gradually in 2022; as of October 2023, REER was 1.1 percent above that observed in 2022. - Assessment of competitiveness: - EBA-lite REER model suggests an overvaluation of 11.9 percent. - Based on CA gap and elasticity of 0.3, staff assesses the REER to be undervalued by 23.6 percent. - Staff view: impact of REER movements on competitiveness is limited given heavy reliance on hydrocarbon exports priced in U.S. dollars and elastic supply of expatriate labor. ### Capital and financial accounts; portfolio and bank liabilities - Capital and financial account deterioration in 2022 driven by: - Net portfolio outflows totaling 5 percent of GDP (portfolio investments abroad of 4.5 percent of GDP and reversal of inward portfolio flows of 0.5 percent of GDP). - Large acquisition of assets abroad and reduction in net incurrence of liabilities, mostly by commercial banks after QCB measures. - 2023H1: similar trend with outflows, including portfolio investment abroad. - Assessment: lack of detailed information on financial flows complicates analysis; strong reserves position and QIA’s estimated sizable assets limit risks; declines in commercial banks’ exposure to foreign liabilities have reduced risks amid higher external funding cost. ### FX intervention and reserves adequacy - QCB reserves level at end-2022: US$47.4 billion (increase of US$6.9 billion in 2022). - Reserves as share of indicators (end-2022): - 20 percent of GDP - 7.5 months of prospective imports - 24.1 percent of broad money - 172.9 percent of short-term external debt - Reserves relative to IMF ARA metric: estimated 52 percent of ARA (up from 49 percent in 2021). - Much of the 2022 current account surplus estimated to have been invested by the QIA overseas. - 2023H1: reserve accumulation more modest than current account surplus of US$20.3 billion, attributable to portfolio investment abroad dynamics. - Broader assets: - QIA estimated foreign assets at end-2022: 176.9 percent of GDP. - Combined QCB reserves and QIA assets account for 508 percent of the ARA metric (significantly above the 100 percent adequacy benchmark). - Staff assessment: Qatar’s “overall” FX reserves remained adequate in 2022. ### Risk Assessment Matrix — key risks and policy responses - High (likelihood) / Medium (impact): Intensification of regional conflict(s). - Impact: depends on event; higher global oil prices could be positive for Qatar but may be offset by weaker investor confidence and disruptions. - Policy response: fiscal space available; central bank to provide liquidity if needed; close monitoring of financial institutions. - High / High: Commodity price volatility. - Impact: LNG expansion raises sensitivity to energy price volatility; higher energy prices could strengthen fiscal/external positions and boost non-hydrocarbon output; lower prices would weaken external and fiscal balances. - Policy response: implement transparent medium-term fiscal and debt management framework; broaden revenue base toward non-hydrocarbon sources; accelerate structural reforms for diversification. - Medium / Medium: Abrupt global slowdown or recession. - Impact: lower external demand reduces hydrocarbon prices and weakens fiscal/external positions; financial market corrections could cause capital outflows. - Policy response: fiscal space to respond; anchor fiscal policy in a medium-term framework; monitor banking sector; accelerate structural reforms. - Medium / Low: Monetary policy miscalibration. - Impact: de-anchoring of inflation expectations limited given currency peg and low domestic inflation. - Policy response: maintain monetary policy and liquidity management consistent with the peg; monitor banking sector. - Medium / Low: Systemic financial instability. - Impact: tighter global conditions increase debt service and liquidity risk for banks reliant on foreign funding; mitigants include large buffers and lower exposure to nonresident deposits. - Policy response: prudent financial sector policy; stress tests and inspections; provide liquidity if needed, compatible with the peg. - Medium / Medium: Deepening geoeconomic fragmentation. - Impact: supply disruptions, higher input costs, lower FDI and potential growth; fiscal/external could benefit if gas demand/price strengthens. - Policy response: accelerate fiscal and structural reforms; provide targeted support to vulnerable; maintain prudent financial policy. - Medium / High: Cyberthreats. - Impact: increased cyberthreats with greater global visibility and digitalization. - Policy response: National Cybersecurity Agency (established 2021) and revamped Cybersecurity Strategy; continue close monitoring and supervision of banking and payment systems. - Medium / High: Extreme climate events. - Impact: high vulnerability to climate shocks; limited water resources and rising temperatures increase adaptation costs. - Policy response: initiatives under Qatar National Vision 2030 and Climate Change Action Plan; mitigation and adaptation measures across healthcare, biodiversity, water management, and infrastructure; target of 25 percent reduction in GHG emissions by 2030. - Medium / Medium: Real estate market weakness. - Impact: declining property prices amid oversupply could weaken bank asset quality and construction sector. - Policy response: step up surveillance of property sector; monitor banking sector and recognize NPLs promptly; maintain capital buffers, liquidity and provisioning; fiscal space available to contain threats. ### Implementation status of 2022 Article IV recommendations (selected) - Fiscal policy: - Uphold fiscal discipline: Broad fiscal prudence maintained in 2022–23 and expected to be upheld in the 2024 budget; authorities committed to continued fiscal discipline and reorienting spending toward diversification. - Diversify non-hydrocarbon revenue: Authorities recognize need but prefer to introduce VAT later; infrastructure largely in place for VAT introduction. Law No.11 of 2022 amended to highlight commitment to introducing Global Minimum Tax; amendments imply measures to achieve minimum effective tax rate of 15 percent for in-scope entities. - Streamline current expenditures: Authorities aim to enhance wage bill efficiency; an expenditure review program is underway; open to further reviewing energy subsidies. - Prioritize public investment in human capital and climate sustainability: Investment focus in 2023 budget; sovereign green financing framework published. - Establish enhanced medium-term fiscal framework: Authorities updating medium-term budget covering a 5-year period and working on program-based budgeting with performance indicators. - Monetary and financial sector policy: - Strengthen liquidity forecasting and coordination: QCB improved liquidity management through T-bill issuance and has requested IMF technical assistance to enhance liquidity forecasting and management. - Continue diligent banking supervision: QCB runs stress tests and publishes results; requested IMF technical assistance to enhance stress testing; QCB measures since early-2022 reduced banks’ exposure to short-term FX nonresident deposits and were refined to mitigate short-term foreign asset-liability mismatch risks; a comprehensive Financial Sector Strategy published with plans to deepen domestic financial market. - Bank resolution and sovereign-bank nexus: D-SIBs required to maintain recovery plans; most generic Key Attributes for resolution plans are in place; QCB can decide on temporary management or liquidation; recovery and resolution plans for Islamic banks being enhanced; QCB requested IMF assistance to strengthen recovery and resolution and develop deposit insurance; QIA market-making initiative to enhance domestic trading liquidity; public sector credit demand declined and public debt continued to decline to below 40 percent of GDP. - Fintech and AML/CFT: Fintech Strategy launched in early 2023 with implementation guidelines; significant progress on technical compliance with FATF Standards; MENA FATF AML/CFT mutual evaluation completed February 2023 and report published May 2023; authorities expected to report back to FATF on effectiveness improvements in 2024. - Structural reforms and statistics: - Accelerate structural reforms: Reforms since the pandemic include enhanced protection and mobility of expatriate labor, streamlined residency procedures, improved business environment, PPP promotion, broader foreign ownership in business and real estate, expansion of public pension to Qataris in private sector (2023), and continued digitalization; upcoming NDS3 expected to provide ambitious reform agenda. - Enhance macroeconomic statistics: PSA enhancing GDP consistency through new supply and use tables, refining housing item specifications, and improving data acquisition; comprehensive data coverage—particularly International Investment Position—remains a challenge, highlighted by absence from CPIS and CDIS surveys. *Source: IMF country chapter content provided in the supplied PDF excerpt.* ### Annex VI. Fiscal and Debt Sustainability Assessment ### Annex VI. Fiscal and Debt Sustainability Assessment ### Overall risk and sustainability assessment - Overall risk of sovereign stress: Low - Comment: "The overall risk of sovereign stress is low, reflecting a low level of vulnerability in the near, medium, and long term." - Near term: Not published/applicable in this surveillance context (note 1/). - Medium term: Mechanical signal = Low; Final assessment = Low - Comment: "Medium-term risks are assessed as low consistent with the mechanical signal. The debt level is relatively low and the QIA holds substantial financial assets." - Long term: Final assessment = Low - Comment: "Long-term risks are low supported by the QIA’s large financial assets, manageable aging-related and social security expenditures, and strong natural gas reserves. As the cleanest fossil fuel, natural gas will likely play a key role for a smoother energy transition relative to fossil fuels with higher emission. Qatar's production cost is low. These together support sizeable revenues over a long term." - Sustainability assessment: "Sustainable with high probability" - Debt stabilization in the baseline: Yes - DSA summary commentary: - "Qatar is at a low overall risk of sovereign stress and debt is sustainable." - "Hydrocarbon prices are set to remain high and commitment to, and the recent track record of, fiscal discipline support low fiscal and debt risk." - "The large reserves of natural gas, cleaner than other browner fossil fuels, is likely to play a key role in a smoother energy transition, and strong financial buffers (including from the QIA) can support fiscal financing." - "The projected non-hydrocarbon primary balance (NHPB) is broadly consistent with the benchmark guided by the Permanent Income Hypothesis (PIH) in the long term." - "The authorities are in the process of producing own actuarial studies on the sustainability of the pension system." _Source: Fund staff._ ### Debt coverage, disclosures, and structure - Debt coverage in the DSA: - Perimeter shown: central government. - The fiscal data cover the central government; staff encourages authorities to expand coverage to include the broader public sector and the QIA. - Inclusion of subsectors in chosen coverage: - Budgetary central government: Yes - Extra budgetary funds (EBFs): No - Social security funds (SSFs): No - State governments: No - Local governments: No - Public nonfinancial corporations: No - Central bank: No - Other public financial corporations: No - Consolidation and valuation notes: - Basis of recording: Not applicable - Valuation of debt stock: Not applicable - Market value, nominal value, face value distinctions noted in table footnotes. ### Public debt structure indicators (central government perimeter) - Authorities' target: debt-to-GDP ratio below 40 percent; target mix of local and external debt eventually 60/40. - Residual maturity: 6. years - Figures shown for: - Debt by currency (percent of GDP): foreign currency vs local currency (projection series 2013–2031). - Public debt by holder (percent of GDP): external private creditors, domestic commercial banks, etc. (2013–2021 and projections). - Public debt by governing law, by instruments, and by maturity (projections 2018–2028). ### Baseline scenario: key statistics and drivers (percent of GDP unless indicated) - Public debt: - Actual 2022: 42.5 - 2023: 39.4 - 2024: 37.5 - 2025: 36.2 - 2026: 35.2 - 2027: 33.7 - 2028: 33.5 - 2029: 32.6 - 2030: 31.2 - 2031: 30.2 - 2032: 29.4 - Change in public debt (year-on-year): - 2022: -15.9 - 2023: -3.1 - 2024: -1.9 - 2025: -1.3 - 2026: -1.0 - 2027: -1.5 - 2028: -0.2 - 2029: -0.9 - 2030: -1.4 - 2031: -1.0 - 2032: -0.9 - Contribution of identified flows: - Total identified flows (contribution): -18.5 (2022), -4.5 (2023), -1.9 (2024), -1.3 (2025), -1.1 (2026), -1.6 (2027), -0.4 (2028), -0.9 (2029), -1.4 (2030), -1.0 (2031), -0.8 (2032) - Primary deficit (percent of GDP): -11.9 (2022), -8.9 (2023), -8.4 (2024), -6.6 (2025), -6.0 (2026), -6.1 (2027), -5.4 (2028), -5.6 (2029), -5.3 (2030), -5.6 (2031), -6.4 (2032) - Noninterest revenues: 34.8 (2022), 31.5 (2023), 31.1 (2024), 29.5 (2025), 28.7 (2026), 28.3 (2027), 27.9 (2028), 28.1 (2029), 27.8 (2030), 28.1 (2031), 28.9 (2032) - Noninterest expenditures: 22.9 (2022), 22.6 (2023), 22.7 (2024), 23.0 (2025), 22.8 (2026), 22.3 (2027), 22.4 (2028), 22.5 (2029), 22.5 (2030), 22.5 (2031), 22.5 (2032) - Automatic debt dynamics: -13.3 (2022), 0.2 (2023), -0.3 (2024), -0.1 (2025), -1.2 (2026), -1.5 (2027), -0.2 (2028), 0.7 (2029), 0.1 (2030), 0.3 (2031), 0.3 (2032) - Real interest rate and relative inflation: -6.4 (2022), 0.9 (2023), 0.5 (2024), 0.7 (2025), 0.8 (2026), 1.0 (2027), 0.9 (2028), 0.7 (2029), 0.8 (2030), 0.8 (2031), 0.8 (2032) - Real interest rate: -10.9 (2022), 2.3 (2023), 0.5 (2024), 0.7 (2025), 1.0 (2026), 1.3 (2027), 1.1 (2028), 0.7 (2029), 0.7 (2030), 0.8 (2031), 0.8 (2032) - Relative inflation: 4.6 (2022), -1.4 (2023), 0.0 (2024), -0.1 (2025), -0.2 (2026), -0.3 (2027), -0.2 (2028), 0.0 (2029), 0.0 (2030), 0.0 (2031), 0.0 (2032) - Real growth rate: -2.4 (2022), -0.7 (2023), -0.7 (2024), -0.7 (2025), -2.0 (2026), -2.5 (2027), -1.1 (2028), -0.1 (2029), -0.7 (2030), -0.5 (2031), -0.5 (2032) - Other identified flows / Other transactions: 6.7 (2022), 4.2 (2023), 6.8 (2024), 5.4 (2025), 6.1 (2026), 5.9 (2027), 5.3 (2028), 4.1 (2029), 3.9 (2030), 4.4 (2031), 5.2 (2032) - Contribution of residual: 2.6 (2022), 1.4 (2023), 0.0 (2024), 0.0 (2025), 0.1 (2026), 0.2 (2027), 0.2 (2028), 0.0 (2029), 0.0 (2030), 0.0 (2031), 0.0 (2032) - Gross financing needs: - -5.1 (2022), -2.4 (2023), -4.9 (2024), -3.4 (2025), -4.2 (2026), -4.0 (2027), -3.0 (2028), -2.6 (2029), -1.7 (2030), -2.1 (2031), -2.7 (2032) - Of which: debt service: 6.8 (2022), 6.6 (2023), 3.5 (2024), 3.1 (2025), 1.8 (2026), 2.1 (2027), 2.4 (2028), 3.0 (2029), 3.7 (2030), 3.6 (2031), 3.7 (2032) - Local currency debt service: 5.2 (2022), 2.1 (2023), 2.2 (2024), 2.2 (2025), 1.3 (2026), 1.7 (2027), 2.0 (2028), 2.6 (2029), 3.3 (2030), 3.2 (2031), 3.3 (2032) - Foreign currency debt service: 1.6 (2022), 4.4 (2023), 1.4 (2024), 0.9 (2025), 0.5 (2026), 0.4 (2027), 0.4 (2028), 0.4 (2029), 0.4 (2030), 0.4 (2031), 0.4 (2032) - Memo: - Real GDP growth (percent): 4.2 (2022), 1.6 (2023), 1.9 (2024), 2.0 (2025), 5.9 (2026), 7.6 (2027), 3.4 (2028), 0.2 (2029), 2.1 (2030), 1.7 (2031), 1.7 (2032) - Inflation (GDP deflator; percent): 26.2 (2022), -2.2 (2023), 2.1 (2024), 1.5 (2025), 0.9 (2026), -0.2 (2027), 0.6 (2028), 2.0 (2029), 2.0 (2030), 2.0 (2031), 2.0 (2032) - Nominal GDP growth (percent): 31.5 (2022), -0.7 (2023), 4.0 (2024), 3.5 (2025), 6.8 (2026), 7.4 (2027), 4.1 (2028), 2.2 (2029), 4.1 (2030), 3.7 (2031), 3.7 (2032) - Effective interest rate (percent): 1.5 (2022), 3.1 (2023), 3.4 (2024), 3.5 (2025), 3.7 (2026), 3.9 (2027), 4.1 (2028), 4.2 (2029), 4.4 (2030), 4.6 (2031), 4.8 (2032) - Staff commentary: "The public debt ratio is projected to progressively decline reflecting sizeable primary surpluses and stable economic conditions." ### Medium-term and long-term risk assessments - Medium-term risk assessment: Figure AVI.4 presented (visual assessment). - Long-term risk assessment and scenarios (Figure AVI.5): - Staff assesses risks related to large amortization as low; baseline paths suggest the debt ratio would remain low and stable. - Alternative scenarios shown: - Medium-term extrapolation - Medium-term extrapolation with debt stabilizing primary balance (DSPB) - Historical 10-year average (includes COVID-19-related shocks) — generates a notable rise in the debt ratio. - Natural resources scenario: - Staff comment: "When the pace of natural gas production is reduced relative to under the baseline, in a bid to moderate the pace of reserve reduction, would raise the debt ratio above its benchmark path (generated by mechanically extending staff's medium-term baseline into the long term) and eventually to around 40 percent of GDP in the long run." - Large amortization risks: assessed as low and consistent with mechanical overall risk indication. ### Demographics and pension long-term assessment - Pension system coverage: "covers Qatari nationals, around a 10th of the total population in Qatar." - Key 2023 reforms: contribution rate increased by 6 ppts to 21 percent of salary; minimum retirement age and years of services were raised. - Authorities plan to conduct and publish own sustainability study in 2024. - Pension financing needs illustrations: - "To keep pension assets positive for: - 50 years: 0.00% (permanent adjustment needed in the pension system) - Until 2100: 0.27% - 30 years: 1.48%" - Staff assessment: risks from pension financing needs are low. ### Contingent liabilities and intra-government holdings - Contingent liabilities in the baseline: 0.0 (percent of GDP) across projection years shown. - Reporting on intra-government debt holdings: table indicates zero holdings across listed subsectors for the chosen coverage (budget central government, extra-budget funds, social security funds, state govt., local govt., nonfin pub. corp, central bank, other pub. fin corp) within the central government perimeter. ### Renewable energy investment: summary of Annex VII findings (linked assessment) - Context and objectives: - Qatar's hydrocarbon resources—dominated by liquefied natural gas (LNG)—represented 44 percent of GDP and more than 80 percent of government’s revenues in 2022. - Qatar's National Environment and Climate Change Strategy aims to reduce 25 percent of business-as-usual GHG emission by 2030 (Nationally Determined Contributions). - Power and water sector expected contribution to NDC: reduction of 6.2 MT CO2 equivalent (largest non-hydrocarbon-sector contributor). - RE investment package 2024–35: - Cumulative investment cost: USD 14 billion, QR 50 billion, or 5.6 percent of 2024 GDP. - Target: bring share of renewable electricity generation to 30 percent by 2035 (baseline 5 percent). - Mechanisms: direct investment by government or GREs, or subsidizing solar energy generation cost to lower it to 1 cent per KWh. - Emissions impact: Increasing RE generation share to 30 percent by 2035 would reduce emissions by 4.5 MTCO2e — equal to 70 percent of the targeted reduction for the power and water sector per QNE. - Note: "30 percent of energy generation from renewables is close to the frontier of solar and wind electricity generation as only ten countries have higher shares (2022 data from OurWorldinData.com). It is also consistent with the authorities’ goal of 20 percent of energy from renewable sources by 2030." - Economic impact of RE investments: - Method: CPAT provides investment profile; economic impact calculated using impulse response coefficients for green spending (Batini and others, 2021). - Estimated near-term growth impact on real non-hydrocarbon GDP growth: increase between 0.53 to 0.67 ppts in 2024 with smaller gains in following years. - Cumulative effect: "leading to a cumulative increase in non-hydrocarbon economic activity between 20 to 50 percent larger than the invested amounts." - Investment timing: investments are approximately equally split between each year from 2024 to 2035. - Multiplier dynamics: "The impact of each dollar of investment is estimated to be larger during the first year (about 40% of total impact), and then fading to zero at the fifth year." - Environmental and broader benefits: - RE investments complement energy subsidy reform to achieve NDC. - Green investment multipliers: estimated in range 1.1–1.5 (Batini and others, 2021) vs fossil fuel energy investment multiplier around 0.5. - RE investments can support growth, employment, and diversification consistent with Qatar National Vision 2030. _Source: Fund staff._ ### References ### 1qatea2024001 - References ### Key References - Acemoglu, Daron; Ufuk Akcigit; Douglas Hanley; and William Kerr. 2016. “Transition to Clean Technology” Journal of Political Economy. - Anderson, Gareth; Jiayi Ma; Tokhir Mirzoev; Ling Zhu; and Karlygash Zhunussova. 2022. “A Low-Carbon Future for the Middle East and Central Asia What Are the Options?” IMF Staff Discussion Paper. - Batini, Nicoletta; Mario Di Serio; Matteo Fragetta; Giovanni Melina; and Anthony Waldron. 2021. "Building Back Better: How Big Are Green Spending Multipliers?" IMF WP 21/87. - Black, Simon; Ian W.H. Parry; Victor Mylonas; Nate Vernon; and Karlygash Zhunussova. 2023. “The IMF-World Bank Climate Policy Assessment Tool (CPAT): A Model to Help Countries Mitigate Climate Change” IMF WP 23/128. - International Monetary Fund (IMF). 2020. “Mitigating Climate Change—Growth- And Distribution-Friendly Strategies” October 2020 World Economic Outlook Chapter 3. - IMF. 2022a. “Staff Report for the 2022 Article IV Consultation, Qatar” June 2022. - IMF. 2022b. “A Greener Labor Market: Employment, Policies, and Economic Transformation” April 2022 World Economic Outlook Chapter 3. ### Annex VIII — Key Structural Reforms in 2018-23 - Removal of “No Objection” Certificate Requirement - Enables employees to switch employers without requiring the employer’s permission. - Entry and Exit of Expatriates and their Residence - Allows expatriate workers to leave the country without requiring exit permits. - Establishment of Qatar Visa Centers (QVCs) - To simplify residency procedures for expatriate workers and facilitate necessary paperwork prior to contracted workers entering Qatar. - Amendment to Regulations on Labor Disputes - The Cabinet approved draft amendments to Qatar Financial Center (QFC) Regulation to improve the processes of the labor dispute settlement committees. - National Minimum Wage - Upward revision of the minimum wage. - Regulating the Investment of Non-Qatari Capital in Economic Activity - Permits foreign investors to invest in Qatar as majority shareholder with up to 100 percent foreign ownership. - Regulation of Non-Qataris’ Ownership and Usage of Real Estate - Legislates foreign real estate investment and ownership and allows for real estate developers freehold ownership of real estate. - Property Rights - Covers the rules of expropriation of property for public benefit. - Organizing the Partnership between the Public and Private Sector - Legislates public-private partnerships. - Establishing the Investment Promotion Agency - The Ministry of Commerce and Industry (MOCI) set up the Investment Promotion Agency-Qatar to further attract inward FDI. - Establishing of the Investment Commerce Court - Establishes the Investment and Commerce Court to oversee all commercial lawsuits and disputes. - Mediation in the Settlement of Civil and Commercial Disputes - Sets out the framework for the mediation and settle commercial disputes. - Combating Money Laundering and Terrorism Financing - Establishes the regulatory framework to ensure due diligence by financial institutions (monitored by the Qatar Central Bank) to prevent money laundering and terrorism financing. Sources: Authorities and IMF staff. ### Annex IX — Promoting Gender Equality: Enhancing Women’s Workforce in Qatar - Overview and motivation - Gender inequality in the workforce can impede economic growth. - Qatar surpasses its regional peers in female labor force participation, but sizeable gender gaps in the labor market persist. - As Qatar continues to transform toward a knowledge-based economy, bolstering women’s roles in the workforce by eliminating barriers and adapting women to future work trends is imperative. - Prepared by Sidra Rehman (EUR) and Naomi-Rose Alexander and Lisa Kolovich (both SPR Inclusion and Gender Unit). - Key findings and statistics - Qatari female labor force participation (FLFP) rate: 42.9 percent. - FLFP is almost 23 ppts below that for men. - FLFP has increased by 9.3 ppts over the last decade, with most progress during the pandemic. - Non-Qatari FLFP rate: close to 60 percent. - Non-Qatari FLFP is 31 ppts below that for non-Qatari men. - Women on average have two more expected years of schooling than men. - Women’s human capital index is higher than that of men and above global average. - Over 90 percent of the workforce comprises migrants, mainly in low-skilled roles. - Women are entitled to 50 days of maternity leave, fully paid by the employer. - Labor market dynamics and education - Qatari female unemployment rate remains above that for males and women’s employment is more susceptible to shocks; the pandemic widened the female-male unemployment rate gap among Qataris. - Women’s enrollment in tertiary education is well above men’s and rising steadily. - Female students have tended to focus on education, health, journalism and sciences—with enrollment in engineering, manufacturing and technology being lower, though female enrollment in engineering and technology is reportedly increasing. - Legal and institutional context - 2004 Labor Law: does not allow gender-based discrimination in recruitment but discourages women’s employment in certain occupations due to concerns of danger or health; may impose working hour limitations. - UNDP: Law ensures equal remuneration for the same work but no provision ensuring equal pay (including benefits) for work of equal value (UNDP, 2019). - Wage disparities: women earn less than men in mining, quarrying, and information technology; women out-earn men in education, real estate, and manufacturing. - Qatar Financial Centre’s Employment Regulations prohibit gender discrimination and ensure safety and equal pay for similar work. - 2007 Law No. 5 allowed women to apply for passports in the same way as men, improving World Bank WBL score on ‘Mobility’. - Law No. 15 of 2017 addresses domestic workers, ensuring rights like maximum working hours, paid leaves, suitable housing, medical care, and decent treatment. - The Labor Law doesn’t explicitly address sexual harassment, but the Penal Code penalizes offensive actions towards women. - Government initiatives and programs - National Committee for the Empowerment of Women (established 2011) - Shapes and executes policies and programs to boost women’s economic engagement, including the “Women’s Economic Empowerment Strategy”. - Education and Training - Qatar Foundation’s Education City: offers access to global universities tailored to regional labor market needs. - Qatar University’s Specialized Programs: provides specialized training and workshops, and champions research for women. - Support for Women Empowerment - Ministry of Labor’s Women’s Work Group Initiative gathers representatives to share best practices, research, and experiences to boost women’s professional potential. - Policy recommendations and strategic priorities - Eliminate educational and labor market barriers: - Broaden sectors available for female employment. - Implement female-friendly workplace reforms: flexible work shifts, allowing virtual job interviews, and providing affordable quality childcare. - Enable remote work and promote future-readiness: - Leverage Qatar’s advanced digital infrastructure to support remote and flexible work arrangements. - Update labor regulations to support and protect women’s role in emerging jobs. - Strengthen and diversify leadership roles: - Increase women’s representation in leadership to promote inclusive decision-making, greater innovation, and broader perspectives. - Emphasize regular monitoring and evaluation of policy effectiveness to guide Qatar’s macroeconomic gender strategy. *Source: References.* ### References ### References and Informational Annex (QATAR Staff Report for the 2023 Article IV Consultation) ### References (selected citations) - Gonzales, Christian, Kochhar, Kalpana, Sonali Jain-Chandra, and Monique Newiak. 2019. Fair Play: More Equal Laws Boost Female Labor Force Participation. IMF Staff Discussion Note 19/08. Washington DC: International Monetary Fund. - International Monetary Fund. 2019. Closing the Gender Gap – FINANCE & DEVELOPMENT – March 2019, Volume 56. International Monetary Fund, Washington DC. - Ostry, J., J. Alvarez, R. Espinoza, and C. Papageorgiou. 2018. “Economic Gains from Gender Inclusion: New Mechanisms, New Evidence,” IMF Staff Discussion Note 18/06. International Monetary Fund, Washington DC. - Qatar University. Attitudes towards Female Labor Force Participation in Qatar. 2020. Policy Report. The Social and Economic Survey Research Institute Qatar University. - United Nations Development Program, UN Women, UNFPA, and ESCWA. 2019. Gender Justice & The Law: Assessment of laws affecting gender equality in the Arab States region - Qatar country profile. ### Relations with the Fund - Membership Status: - Joined on September 8, 1972; Article VIII on June 4, 1973. - General Resources Account (SDR Million / Percent Quota): - Quota: 735.10 100.00 - Fund holdings of currency: 524.47 71.35 - Reserve position in Fund: 210.63 28.65 - SDR Department (SDR Million / Percent Allocation): - Net cumulative allocation: 955.96 100.00 - Holdings: 983.03 102.83 - Outstanding Purchases and Loans: None - Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs): - Principal: Forthcoming (no numeric values provided) - Charges/Interest: 0.00 0.01 0.01 0.01 0.01 - Total: 0.00 0.01 0.01 0.01 0.01 - Implementation of HIPC Initiative: Not Applicable - Safeguards Assessments: Not Applicable - Exchange Rate Arrangement: - De jure and de facto: conventional pegged arrangements against the U.S. dollar. - Peg: QR3.64 per U.S. dollar since July 2001; unofficial peg since June 1980. - Obligations: Accepted under Article VIII, Sections 2(a), 3 and 4. - Notes: Maintains exchange restrictions for security reasons based on UN Security Council Resolutions; notified to the Fund under Executive Board Decision No. 144 (52/51). - Last Article IV Consultation: - Discussions: February 13–March 1, 2022 (remote). - Executive Board consideration: May 27, 2022. - Publication date: June 21, 2022. ### FSAP, ROSC, and Technical Assistance - FSAP missions: conducted in 2007. - AML/CFT assessment: detailed assessment against FATF 40+9 Recommendations during 2006–7; presented to MENAFATF and FATF; adopted and published; ROSC circulated September 2008. - Resident Representative: None - Technical Assistance (Department — Date — Activity): - STA April 2000 Real Sector Statistics - STA May 2001 Balance of Payments Statistics - STA January 2005 Multisector Statistics - STA April 2006 Government Finance Statistics - LEG November 2006 AML/CFT Pre-assessment - STA April 2007 GDDS Assessment - LEG October 2009 AML/CFT Long-Term Advisor Providing TA - STA October 2010 Balance of Payments Statistics - STA September 2012 Coordinated Direct Investment Survey - LEG March 2014 AML/CFT follow up - FAD April 2014 Macro-fiscal unit - LEG November 2014 Risk-based approach to AML/CFT - STA November 2016 SDDS Assessment Mission - STA May 2017 External Sector Statistics - LEG June 2017 AML/CFT Legislative Mission - STA March 2018 National Accounts Statistics - STA May 2019 E-GDDS - STA May 2019 Government Finance Statistics ### Relations with the World Bank Group - World Bank Country Page: https://www.worldbank.org/en/country/gcc/brief/qatar-country-program ### Statistical Issues — Assessment of Data Adequacy for Surveillance (As of December 2023) - General: - Data provision has some shortcomings but is broadly adequate for surveillance. - Substantial scope for improving data frequency, timeliness and coverage. - Most affected areas: fiscal statistics, international investment position, and external debt statistics. - National Accounts: - Qatar publishes quarterly estimates of GDP at current and constant prices compiled based on limited source data. - Demand-side data particularly limited. - Procedures to benchmark quarterly to annual estimates need improvements to align with international best practice. - The Planning and Statistics Authority (PSA) is producing new supply and use tables to improve GDP consistency. - Price statistics: - Monthly CPI published based on a basket with a significant share of rents. - Monthly producer price index (PPI) for the Industrial Sector published (Manufacturing; Electricity, gas, steam and air conditioning supply, and Water supply). - Real estate statistics: - Qatar Central Bank (QCB) publishes an aggregate residential real estate monthly price index covering transactions between private parties. - Ministry of Justice publishes Weekly Newsletter with daily transaction data by type. - Government Finance Statistics: - Authorities implementing Government Financial Management Information System (GFMIS) enabling compilation of accrual fiscal accounts. - IMF TA mission in 2019 supported transition to Government Finance Statistics Manual 2014. - Detailed annual budget documents and quarterly budget performance reports for the central government published. - For the 2023 budget, a press release was published; Minister provided relevant information at the press conference in lieu of the regular budget statement. - Fiscal coverage should be broadened to cover the general government and Qatar Investment Authority. - Monetary statistics: - QCB submits monetary and financial statistics (MFS) for the central bank and other depository corporations based on Standardized Report Forms (SRFs). - MFS data published in the International Financial Statistics on a timely basis. - Qatar reports some Financial Access Survey (FAS) series including mobile money and two U.N. Sustainable Development Goals indicators, but does not report data by gender. - Financial Sector Surveillance: - QCB reports Financial Soundness Indicators as part of the National Summary Data Page but does not submit them to the IMF. - External Sector Statistics (ESS): - QCB reports quarterly balance of payments data with timely submission to STA, following BPM5. - Financial account coverage improved for major public corporations, Qatar Financial Center Authority, and Qatar Stock Exchange. - A 2017 TA mission developed a quarterly survey for nonfinancial sector data aimed at producing a quarterly IIP statement. - More work needed to ensure comprehensive coverage, collection, and granularity, particularly for International Investment Position (IIP) data. - Gaps due to non-participation in CPIS and CDIS noted. - External debt: - Data on medium and long-term external debt provided to missions during Article IV consultations. - Debt office at the Ministry of Finance collating information about central government and public sector enterprise debt. - Authorities publish central government external debt data on QCB’s website. - Recommendation: publish aggregate data on public sector enterprise external debt. ### Data Standards and Quality - GDDS participation since December 2005. - Implemented e-GDDS reporting via the National Summary Data Page starting July 2019. - SDDS assessment mission in 2016 found further efforts needed to meet SDDS requirements. ### Table of Common Indicators Required for Surveillance (As of December 2023) — Selected entries - Exchange Rates: Date of latest observation Dec. 2023; Date received Dec. 2023; Frequency: D (Daily) for data, reporting, and publication. - International Reserve Assets of the Monetary Authorities: Date of latest observation Oct. 2023; Date received Nov. 2023; Frequency: M (Monthly) for data, reporting, and publication. - Reserve/Base Money: Oct. 2023 / Nov. 2023 / M / M / M - Broad Money: Oct. 2023 / Nov. 2023 / M / M / M - Central Bank Balance Sheet: Oct. 2023 / Nov. 2023 / M / M / M - Consolidated Balance Sheet of the Banking System: Oct. 2023 / Nov. 2023 / M / M / M - Interest Rates: Date of latest observation Nov. 2023; Date received Dec. 2023; Frequency: M / M / M - Consumer Price Index: Oct. 2023 / Nov. 2023 / M / M / M - Revenue, Expenditure, Balance and Composition of Financing – Central Government: - Date of latest observation 2023 Q3; Date received Nov. 2023; Frequency: Q / Q / Q - Stocks of Central Government and Central Government-Guaranteed Debt: - Date of latest observation 2023 Q2; Date received Sep. 2023; Frequency: Q / Q / Q - External Current Account Balance: 2023 Q2 / Oct. 2023 / Q / Q / Q - Exports and Imports of Goods: Oct. 2023 / Dec. 2023 / M / M / M - Exports and Imports of Goods and Services: 2023 Q2 / Oct. 2023 / Q / Q / Q - GDP/GNP: 2023 Q2 / Nov. 2023 / Q / Q / Q - Gross External Debt: 2023 Q2 / Sep. 2023 / Q / Q / Q - International Investment Position: ... / ... / NA / NA / NA *QATAR STAFF REPORT FOR THE 2023 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX (December 18, 2023).* --- _Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1qatea2024001.pdf_