## 4.      Despite the significant progress made, more measures are necessary to support progress towards achieving Vision 2030

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---

### Current challenges and structural performance
- Economic structure and productivity
  - Qatar continues to rely significantly on hydrocarbon in exports and government revenue.
  - Total factor productivity is on a declining trend since the early-2000s at a faster pace than in other GCC countries and contrary to the rising trajectory in OECD commodity producers.
  - Labor productivity remains relatively lower.
- Public sector effectiveness and constraints
  - Qatar scores relatively high on public sector performance, particularly on government effectiveness in policy formulation and implementation.
  - The large role of the state in the economy is not conducive to private sector development and competition.
- Education and skills
  - Despite considerable public spending on education, Qatar lags OECD median in average years of school attendance and performances in standardized tests such as PISA, particularly in STEM subjects.
  - TOEFL score of Qatari students in 2020 lags that of OECD and some GCC peers.
  - According to the 2020 Census, 64 percent of Qatari females have a secondary and post-secondary school qualification, comparable to 62 percent of Qatari men.
  - Gaps exist in availability of skilled workers, skill mismatches, and labor force participation.
- Gender gaps
  - Significant and persistent gender gaps in labor force participation limit labor availability and labor productivity improvements.
  - In 2021, the female labor force participation rate for Qatari nationals was 25 percentage points below that of men.
  - The 2023 World Bank Women Business and Law (WBL) report points to legal barriers affecting women’s decisions to work in Qatar.
- Employment composition and incentives
  - More than 90 percent of Qatari nationals are employed in the public sector, which offers favorable work conditions, generous compensation and benefits, and job security.
  - Large public sector employment incentivizes education and skills matching public service demand, widening the gap between supply of skills and private sector needs.
- State footprint, competition, and investment barriers
  - SOEs still play a major role and dominate sectors such as oil and gas, and telecommunications.
  - State institutions and government-owned companies are allowed to have predominant roles in some sectors; concentration of state ownership can limit private entries.
  - Restrictions remain on foreign direct investment in certain sectors (e.g., banking, insurance, and commercial agencies).
  - Foreign ownership and leasing rights of real estates, while broadened, still limit to designated zones.
- Trade and finance frictions
  - Qatar imposes a 5 percent ad valorem tariff on the C.I.F. invoice value of most imported products as a GCC Customs Union member.
  - Trade-weighted tariff rates for non-agricultural and non-fuel products remain well above the OECD level; compliance costs for imports and exports remain above OECD median.
  - Limited access to finance by SMEs due to weak credit information and creditor rights, insufficient collateral infrastructure, and potential crowding out by large public sector financing needs.
- Legal, regulatory, and climate vulnerabilities
  - Room to enhance public consultation and transparency of legislative and regulatory processes; legal and regulatory framework for technology/IP protection lags some GCC peers.
  - Lags between issuance of Qatari laws in Arabic and translation to English.
  - Hydrocarbon sector contributes to significant GHG emissions per capita in Qatar, which, while declining, is the highest globally; Qatar is highly vulnerable to climate stressors.

### Key reforms recommended — Labor market
- Enhance labor market dynamics and attract high-skilled expats by:
  - (i) fully implementing recent expatriate labor market reforms and removing remaining restrictions;
  - (ii) modernizing visa and work permit issuance process for expatriate workers;
  - (iii) easing the process for granting residency status for high-skilled workers and entrepreneurs with significant investments in Qatar;
  - (iii) retraining expatriates to upgrade skill levels;
  - (iv) strengthening the social safety net for expatriate workers.
- Improve educational attainment and skills by:
  - (i) aligning education quality and outcome to international standards, particularly in STEM subjects;
  - (ii) linking teacher compensation to performance (education outcomes);
  - (iii) supporting early childhood development and education.
  - Coordinate stakeholders so skills among Qatari nationals orient toward private sector needs; involve private sector in vocational and tertiary curricula design.
- Incentivize private sector employment among Qatari nationals by:
  - (i) conducting a civil service review to rationalize public sector employment and allow for natural attrition of nonessential positions;
  - (ii) aligning promotions and pay with performance (NDS2 recommendation);
  - (iii) creating options for public employees to undertake temporary employment in the private sector or transition to the private sector prior to retirement without loss in public pension.
  - Expanding the Social Insurance Law (2022) to include unemployment insurance, educational and medical benefits for Qatari nationals employed in the private sector could help.
- Increase Qatari female labor force participation by:
  - prohibiting discrimination in employment based on gender, enhancing workplace protection of women, and reducing barriers for Qatar’s women to participate in the labor force;
  - encouraging female-friendly practices (e.g., shifts/teams with only female members, flexible work arrangements including remote work);
  - expanding access to affordable and quality childcare facilities and early childhood education;
  - leveraging technology platforms for job search, remote work, and female entrepreneurship; and
  - strengthening and diversifying leadership roles to include more women.

### Key reforms recommended — Business environment and governance
- Trade openness and regional integration
  - (i) reduce trade-weighted tariff rates on non-agriculture and non-fuel products;
  - (ii) enhance services trade through lower non-tariff barriers, streamline customs clearance procedures and simplify documentation, further liberalize trade in banking, insurance, and commercial agencies;
  - (iii) promote free trade agreements;
  - (iv) facilitate regional trade integration by aligning trade regulations and tax on goods and services within the GCC.
- Promote foreign and private investment
  - (i) open up more sectors for foreign investment and allow for majority foreign ownership, especially outside economic zones;
  - (ii) further expand freehold ownership of real estates from current designated zones.
  - Enhance digital infrastructure (e.g., improving internet speed) to support knowledge economy development.
- Reduce role of SOEs and increase competition
  - increase competition, enhance procurement bidding processes, and revisit preferential treatment given to large enterprises (including SOEs) in government procurement.
- Ease SMEs’ access to finance by:
  - (i) enhancing the insolvency framework and the efficiency of the court system;
  - (ii) increasing coverage of the credit bureau and credit registry;
  - (iii) further protecting legal rights of borrowers and lenders by enhancing property rights;
  - (iv) increasing recovery rate by improving foreclosure/receivership proceedings and the efficiency of proceedings to reduce cost;
  - (v) encouraging a robust fintech ecosystem;
  - while protecting personal data, simplify procedures for banks to obtain information needed to grant credit.
- Improve legislative and regulatory frameworks
  - reduce bureaucracy, streamline business regulations, enhance transparency and accountability, and undertake judiciary reforms to improve contract enforcement.
  - Strengthen intellectual property rights to encourage private sector R&D.

### Key reforms recommended — Climate mitigation and energy transition
- Gradual removal of energy subsidies to promote efficient energy use and shift demand toward renewable energy.
- Additional measures to accelerate emission reduction and energy transition:
  - Expand solar power building on the successful 800 MW tender in 2020; develop long-term strategy for solar power competitive auctions; integrate into broader electricity market plans such as energy buy-back schemes.
  - Expand carbon capture and storage (CSS) by requiring carbon sequestration units in hard-to-abate sectors such as cement; deploy pilot projects at scale and selective use of CCS.
  - Further develop blue hydrogen value chains; Qatar is already poised to produce blue ammonia which can be converted to hydrogen; develop upstream value chain including methanol and cryogenic H2 using CSS technology.
  - Develop green hydrogen pilots at the 800 MW solar park in partnership with international companies.
  - Decarbonize and diversify transport: broaden use of public transport and ride share by changing cost of parking and congestion pricing.
  - Promote climate finance: improve investment environment and institutional capacity; crowd in and scale up private climate finance via platforms and innovative structured finance such as green bonds.

### Quantifying the impact of structural reforms — model, assumptions, and scenarios
- Model and assumptions
  - Macroeconomic gains are assessed using an IMF model (MCDMOD from the IMF’s Flexible System of Global Models (FSGM)).
  - The quantification provides illustrative examples; shocks used (e.g., to TFP growth and labor participation rate) are outlined in Annex IV.
  - Results assume the government has announced the full extent of reforms with full transparency and reforms are enacted gradually over 5 years.
  - Because of the government’s level of commitment and transparency, households and firms consider the reform packages fully credible, begin adjusting behavior in the first year, and growth benefits are to some degree front-loaded.
- Labor market reform scenario (next 5 years)
  - Reforms modeled:
    - (i) increase the Qatari women labor force participation rate by 10 percentage points;
    - (ii) promote well-targeted active labor market policies for Qatari nationals (requiring increased fiscal spending) so that their productivity increases by 10 percent;
    - (iii) increase the share of higher skilled foreign workers by 10 percentage points through changes in employment requirements and hiring practices, at no fiscal cost.
  - Contextual figures:
    - Some 90 percent of the workforce are foreigners.
  - Estimated impacts (illustrative):
    - A 10 percentage point increase in the proportion of skilled foreign workers would raise average annual non-hydrocarbon real GDP growth by 1.5 percentage points higher per year than the baseline for the next five years.
    - The level of labor productivity would be 7.5 percent above the baseline level by 2028.
- Credibility caveat
  - If households and firms deem the reforms only temporary in some respect, growth gains would be realized fitfully and short-term adjustment costs would be greater.

### Doing Business Reforms — Growth Impacts (2023–28)
- Assessed reforms (over the next 5 years): (i) a permanent reduction in regulatory impediments to doing business; (ii) lower barriers to entry for domestic and foreign firms in more sectors; (iii) enhanced access for banks to corporate credit risk information (illustrated as a 1 percentage point reduction in the corporate risk premium).
- Modeled impacts:
  - Easing access to credit alone: non-hydrocarbon real GDP growth would increase by 0.6 percentage points per year on average relative to the baseline over the next 5 years.
  - Combined effect of deregulation and lower barriers to entry: slightly lower than 0.6 percentage points per year (implicit from text).
  - All three doing-business reforms combined: non-hydrocarbon real GDP growth would rise by 1 percentage point per year relative to the baseline.
  - Labor productivity level with all three reforms: would be 5 percent above the baseline in 2028.
- Modeling assumption for credit reform: a representative illustrative reduction of the corporate risk premium by 1 percentage point (absent numerical evidence on the relationship between credit reporting and corporate risk in Qatar).

### Labor Market Reforms — Growth Impacts and Prioritization
- Key labor market reforms modeled:
  - Increase Qatari female participation rate by 10.0 percentage points (IMF staff assumption for MCDMOD).
  - Promote well-targeted active labor market policies (ALMP) for Qatari nationals raising productivity by 10.0 percent (investment in training, with increased fiscal spending).
  - Increase the proportion of higher-skilled foreign workers by 10.0 percentage points at no cost to the government.
- Aggregate modeled impacts:
  - With all three labor market reforms, average annual non-hydrocarbon real GDP growth would be about 2 percentage points per year above the baseline.
- Prioritization insight:
  - Among labor market reforms, increasing the share of skilled foreign workers will have the greatest growth impact, given that close to 90 percent of the Qatari population is comprised of foreign workers.
  - Reforms that are complementary (e.g., female participation and ALMP) should be implemented together because ALMP can provide training that amplifies the growth impact of both reforms.

### Reform Prioritization and Sequencing — Principles and Recommendations
- Prioritization criteria:
  - Impact magnitude and complementarity of reforms.
  - Ease of implementation and cost-benefit balance (larger gains at lower costs).
  - Political feasibility and government capacity to implement reforms.
  - Whether certain reforms are necessary prerequisites for others.
- Example sequencing recommendation:
  - Pair policies that increase female labor force participation with ALMP to provide training for women entering the workforce, magnifying total impact.
- Specific encouragement to authorities:
  - Implement labor market reforms to increase skilled foreign workers and increase access to finance via better credit information, as these generate the largest modeled gains.

### Conclusion — Strategic Reform Focus for National Vision 2030
- Qatar is formulating its Third National Development Strategy toward National Vision 2030, aiming to transition from a hydrocarbon-intensive, state-led model to a dynamic, diversified, knowledge-based, sustainable, private sector-led growth model.
- Recommended focus areas for further reforms:
  - Boosting productivity and inclusiveness.
  - Fostering a more conducive business environment.
  - Leveraging climate actions for diversification and growth.
- Sequencing guidance:
  - Prioritize reforms based on impact and complementarities. A comprehensive, well-integrated, and properly sequenced reform package exploiting complementarities across labor, business, and climate-related reforms would best boost Qatar’s potential growth significantly.

*Source: IMF staff summary of chapter 4 from sipea2024010.*

### 4.      Despite the significant progress made, more measures are necessary to support progress

### 4.      Despite the significant progress made, more measures are necessary to support progress towards achieving Vision 2030

### Current challenges and structural performance
- Economic structure and productivity
  - Qatar continues to rely significantly on hydrocarbon in exports and government revenue.
  - Total factor productivity is on a declining trend since the early-2000s at a faster pace than in other GCC countries and contrary to the rising trajectory in OECD commodity producers.
  - Labor productivity remains relatively lower.
- Public sector effectiveness and constraints
  - Qatar scores relatively high on public sector performance, particularly on government effectiveness in policy formulation and implementation.
  - The large role of the state in the economy is not conducive to private sector development and competition.
- Education and skills
  - Despite considerable public spending on education, Qatar lags OECD median in average years of school attendance and performances in standardized tests such as PISA, particularly in STEM subjects.
  - TOEFL score of Qatari students in 2020 lags that of OECD and some GCC peers.
  - According to the 2020 Census, 64 percent of Qatari females have a secondary and post-secondary school qualification, comparable to 62 percent of Qatari men.
  - Gaps exist in availability of skilled workers, skill mismatches, and labor force participation.
- Gender gaps
  - Significant and persistent gender gaps in labor force participation limit labor availability and labor productivity improvements.
  - In 2021, the female labor force participation rate for Qatari nationals was 25 percentage points below that of men.
  - The 2023 World Bank Women Business and Law (WBL) report points to legal barriers affecting women’s decisions to work in Qatar.
- Employment composition and incentives
  - More than 90 percent of Qatari nationals are employed in the public sector, which offers favorable work conditions, generous compensation and benefits, and job security.
  - Large public sector employment incentivizes education and skills matching public service demand, widening the gap between supply of skills and private sector needs.
- State footprint, competition, and investment barriers
  - SOEs still play a major role and dominate sectors such as oil and gas, and telecommunications.
  - State institutions and government-owned companies are allowed to have predominant roles in some sectors; concentration of state ownership can limit private entries.
  - Restrictions remain on foreign direct investment in certain sectors (e.g., banking, insurance, and commercial agencies).
  - Foreign ownership and leasing rights of real estates, while broadened, still limit to designated zones.
- Trade and finance frictions
  - Qatar imposes a 5 percent ad valorem tariff on the C.I.F. invoice value of most imported products as a GCC Customs Union member.
  - Trade-weighted tariff rates for non-agricultural and non-fuel products remain well above the OECD level; compliance costs for imports and exports remain above OECD median.
  - Limited access to finance by SMEs due to weak credit information and creditor rights, insufficient collateral infrastructure, and potential crowding out by large public sector financing needs.
- Legal, regulatory, and climate vulnerabilities
  - Room to enhance public consultation and transparency of legislative and regulatory processes; legal and regulatory framework for technology/IP protection lags some GCC peers.
  - Lags between issuance of Qatari laws in Arabic and translation to English.
  - Hydrocarbon sector contributes to significant GHG emissions per capita in Qatar, which, while declining, is the highest globally; Qatar is highly vulnerable to climate stressors.

### Key reforms recommended — Labor market
- Enhance labor market dynamics and attract high-skilled expats by:
  - (i) fully implementing recent expatriate labor market reforms and removing remaining restrictions;
  - (ii) modernizing visa and work permit issuance process for expatriate workers;
  - (iii) easing the process for granting residency status for high-skilled workers and entrepreneurs with significant investments in Qatar;
  - (iii) retraining expatriates to upgrade skill levels;
  - (iv) strengthening the social safety net for expatriate workers.
- Improve educational attainment and skills by:
  - (i) aligning education quality and outcome to international standards, particularly in STEM subjects;
  - (ii) linking teacher compensation to performance (education outcomes);
  - (iii) supporting early childhood development and education.
  - Coordinate stakeholders so skills among Qatari nationals orient toward private sector needs; involve private sector in vocational and tertiary curricula design.
- Incentivize private sector employment among Qatari nationals by:
  - (i) conducting a civil service review to rationalize public sector employment and allow for natural attrition of nonessential positions;
  - (ii) aligning promotions and pay with performance (NDS2 recommendation);
  - (iii) creating options for public employees to undertake temporary employment in the private sector or transition to the private sector prior to retirement without loss in public pension.
  - Expanding the Social Insurance Law (2022) to include unemployment insurance, educational and medical benefits for Qatari nationals employed in the private sector could help.
- Increase Qatari female labor force participation by:
  - prohibiting discrimination in employment based on gender, enhancing workplace protection of women, and reducing barriers for Qatar’s women to participate in the labor force;
  - encouraging female-friendly practices (e.g., shifts/teams with only female members, flexible work arrangements including remote work);
  - expanding access to affordable and quality childcare facilities and early childhood education;
  - leveraging technology platforms for job search, remote work, and female entrepreneurship; and
  - strengthening and diversifying leadership roles to include more women.

### Key reforms recommended — Business environment and governance
- Trade openness and regional integration
  - (i) reduce trade-weighted tariff rates on non-agriculture and non-fuel products;
  - (ii) enhance services trade through lower non-tariff barriers, streamline customs clearance procedures and simplify documentation, further liberalize trade in banking, insurance, and commercial agencies;
  - (iii) promote free trade agreements;
  - (iv) facilitate regional trade integration by aligning trade regulations and tax on goods and services within the GCC.
- Promote foreign and private investment
  - (i) open up more sectors for foreign investment and allow for majority foreign ownership, especially outside economic zones;
  - (ii) further expand freehold ownership of real estates from current designated zones.
  - Enhance digital infrastructure (e.g., improving internet speed) to support knowledge economy development.
- Reduce role of SOEs and increase competition
  - increase competition, enhance procurement bidding processes, and revisit preferential treatment given to large enterprises (including SOEs) in government procurement.
- Ease SMEs’ access to finance by:
  - (i) enhancing the insolvency framework and the efficiency of the court system;
  - (ii) increasing coverage of the credit bureau and credit registry;
  - (iii) further protecting legal rights of borrowers and lenders by enhancing property rights;
  - (iv) increasing recovery rate by improving foreclosure/receivership proceedings and the efficiency of proceedings to reduce cost;
  - (v) encouraging a robust fintech ecosystem;
  - while protecting personal data, simplify procedures for banks to obtain information needed to grant credit.
- Improve legislative and regulatory frameworks
  - reduce bureaucracy, streamline business regulations, enhance transparency and accountability, and undertake judiciary reforms to improve contract enforcement.
  - Strengthen intellectual property rights to encourage private sector R&D.

### Key reforms recommended — Climate mitigation and energy transition
- Gradual removal of energy subsidies to promote efficient energy use and shift demand toward renewable energy.
- Additional measures to accelerate emission reduction and energy transition:
  - Expand solar power building on the successful 800 MW tender in 2020; develop long-term strategy for solar power competitive auctions; integrate into broader electricity market plans such as energy buy-back schemes.
  - Expand carbon capture and storage (CSS) by requiring carbon sequestration units in hard-to-abate sectors such as cement; deploy pilot projects at scale and selective use of CCS.
  - Further develop blue hydrogen value chains; Qatar is already poised to produce blue ammonia which can be converted to hydrogen; develop upstream value chain including methanol and cryogenic H2 using CSS technology.
  - Develop green hydrogen pilots at the 800 MW solar park in partnership with international companies.
  - Decarbonize and diversify transport: broaden use of public transport and ride share by changing cost of parking and congestion pricing.
  - Promote climate finance: improve investment environment and institutional capacity; crowd in and scale up private climate finance via platforms and innovative structured finance such as green bonds.

### Quantifying the impact of structural reforms — model, assumptions, and scenarios
- Model and assumptions
  - Macroeconomic gains are assessed using an IMF model (MCDMOD from the IMF’s Flexible System of Global Models (FSGM)).
  - The quantification provides illustrative examples; shocks used (e.g., to TFP growth and labor participation rate) are outlined in Annex IV.
  - Results assume the government has announced the full extent of reforms with full transparency and reforms are enacted gradually over 5 years.
  - Because of the government’s level of commitment and transparency, households and firms consider the reform packages fully credible, begin adjusting behavior in the first year, and growth benefits are to some degree front-loaded.
- Labor market reform scenario (next 5 years)
  - Reforms modeled:
    - (i) increase the Qatari women labor force participation rate by 10 percentage points;
    - (ii) promote well-targeted active labor market policies for Qatari nationals (requiring increased fiscal spending) so that their productivity increases by 10 percent;
    - (iii) increase the share of higher skilled foreign workers by 10 percentage points through changes in employment requirements and hiring practices, at no fiscal cost.
  - Contextual figures:
    - Some 90 percent of the workforce are foreigners.
  - Estimated impacts (illustrative):
    - A 10 percentage point increase in the proportion of skilled foreign workers would raise average annual non-hydrocarbon real GDP growth by 1.5 percentage points higher per year than the baseline for the next five years.
    - The level of labor productivity would be 7.5 percent above the baseline level by 2028.
- Credibility caveat
  - If households and firms deem the reforms only temporary in some respect, growth gains would be realized fitfully and short-term adjustment costs would be greater.

*Source: IMF staff summary of chapter 4 from sipea2024010.*

### 1.8 percentage points, and 9 percent, respectively. With all three labor market reforms, average annual non-

### From HydroCarbon to Hightech: Mapping the Economic Transformation of Qatar

### Doing Business Reforms — Growth Impacts (2023–28)
- Assessed reforms (over the next 5 years): (i) a permanent reduction in regulatory impediments to doing business; (ii) lower barriers to entry for domestic and foreign firms in more sectors; (iii) enhanced access for banks to corporate credit risk information (illustrated as a 1 percentage point reduction in the corporate risk premium).
- Modeled impacts:
  - Easing access to credit alone: non-hydrocarbon real GDP growth would increase by 0.6 percentage points per year on average relative to the baseline over the next 5 years.
  - Combined effect of deregulation and lower barriers to entry: slightly lower than 0.6 percentage points per year (implicit from text).
  - All three doing-business reforms combined: non-hydrocarbon real GDP growth would rise by 1 percentage point per year relative to the baseline.
  - Labor productivity level with all three reforms: would be 5 percent above the baseline in 2028.
- Modeling assumption for credit reform: a representative illustrative reduction of the corporate risk premium by 1 percentage point (absent numerical evidence on the relationship between credit reporting and corporate risk in Qatar).

### Labor Market Reforms — Growth Impacts and Prioritization
- Key labor market reforms modeled (labor market section notes and Annex IV calibrations):
  - Increase Qatari female participation rate by 10.0 percentage points (IMF staff assumption for MCDMOD).
  - Promote well-targeted active labor market policies (ALMP) for Qatari nationals raising productivity by 10.0 percent (investment in training, with increased fiscal spending).
  - Increase the proportion of higher-skilled foreign workers by 10.0 percentage points at no cost to the government.
- Aggregate modeled impacts:
  - With all three labor market reforms, average annual non-hydrocarbon real GDP growth would be about 2 percentage points per year above the baseline.
- Prioritization insight:
  - Among labor market reforms, increasing the share of skilled foreign workers will have the greatest growth impact, given that close to 90 percent of the Qatari population is comprised of foreign workers.
  - Reforms that are complementary (e.g., female participation and ALMP) should be implemented together because ALMP can provide training that amplifies the growth impact of both reforms.

### Reform Prioritization and Sequencing — Principles and Recommendations
- Prioritization criteria:
  - Impact magnitude and complementarity of reforms.
  - Ease of implementation and cost-benefit balance (larger gains at lower costs).
  - Political feasibility and government capacity to implement reforms.
  - Whether certain reforms are necessary prerequisites for others.
- Example sequencing recommendation:
  - Pair policies that increase female labor force participation with ALMP to provide training for women entering the workforce, magnifying total impact.
- Specific encouragement to authorities:
  - Implement labor market reforms to increase skilled foreign workers and increase access to finance via better credit information, as these generate the largest modeled gains.

### Conclusion — Strategic Reform Focus for National Vision 2030
- Qatar is formulating its Third National Development Strategy toward National Vision 2030, aiming to transition from a hydrocarbon-intensive, state-led model to a dynamic, diversified, knowledge-based, sustainable, private sector-led growth model.
- Recommended focus areas for further reforms:
  - Boosting productivity and inclusiveness.
  - Fostering a more conducive business environment.
  - Leveraging climate actions for diversification and growth.
- Sequencing guidance:
  - Prioritize reforms based on impact and complementarities. A comprehensive, well-integrated, and properly sequenced reform package exploiting complementarities across labor, business, and climate-related reforms would best boost Qatar’s potential growth significantly.

### Annex I — Key Reforms Completed to Strengthen Labor Market Dynamics and Business Environment (2018–23)
- Select laws and measures enacted (2018–23) include:
  - Labor law (19/2020): Enables employees to switch employers without requiring the employer’s permission.
  - Labor law (13/2018): Allows workers to leave the country without requiring exit permits.
  - Established Qatar Visa Centers (QVCs): To simplify residency procedures for expatriate workers.
  - Amendment to regulations on labor disputes (February 2023): Improve processes of labor dispute settlement committees.
  - Minimum wage law (17/2020): Upward revision of the minimum wage.
  - Regulating the Investment of Non-Qatari Capital in Economic Activity Law (1/2019): Permits foreign investors up to 100 percent foreign ownership.
  - Property rights Law (16/2018): Legislates foreign real estate investment and ownership.
  - Expropriation Law (8/2022); Private-public Partnerships Law (12/2020); Investment Promotion Agency (2019); Investment Commerce Court Law (21/2021); Mediation in the Settlement of Civil and Commercial Disputes Law (20/2021); Combating Money Laundering and Terrorism Financing Law (20/2019).

### Annex II — Possible Reforms (Recommendations)
- Enhance human capital development:
  - Improve education quality (particularly STEM and English).
  - Reduce skills mismatch and attract more high-skilled foreign workers.
- Strengthen labor market dynamics:
  - Improve female labor force participation.
  - Incentivize Qatari nationals to take up private sector jobs.
- Trade liberalization:
  - Reduce non-tariff barriers.
  - Liberalize trade in services.
  - Promote intra-regional trade.
  - Timely publication of trade and investment legislation in English.
- Promote competition:
  - Open up the economy to promote healthy competition.
  - Expand real estate ownership program to foreigners.
- Ease access to finance:
  - Enforce loan contracts and accelerate insolvency resolution to improve recovery rates.
  - Improve creditor assessment tools, infrastructure and rights.
  - Enhance property rights.
  - Encourage digitalization/fintech for access to finance.
- Regulatory effectiveness and efficiency:
  - Legal and judiciary reforms to improve contract enforcement and business registration.
  - Enhance transparency and accountability.
  - Streamline bureaucratic procedures and promote e-government.

### Annex III — MCDMOD: Model Description and Calibration
- MCDMOD is part of the IMF’s Flexible System of Global Models (FSGM); a semi-structural, general equilibrium model covering primarily Middle East and Central Asia countries, including Qatar.
- Key model features:
  - Households: non-Ricardian, forward-looking overlapping generations and hand-to-mouth households.
  - Investment: Bernanke, Gertler, and Gilchrist (1999) financial accelerator specification.
  - Trade: exports and imports respond to relative prices and external/domestic demand.
  - Production: aggregate Cobb-Douglas function of capital and labor plus oil production.
  - Labor: equilibrium unemployment determines labor supply; foreign labor specified exogenously with no unemployment among foreign workers; foreign workers modeled as hand-to-mouth for domestic spending; remittances significant.
  - Inflation: consumer price and wage inflation via forward-looking but sluggish Phillips curves.
  - Fiscal policy: maintains a debt-to-GDP target via government consumption, public investment, lumpsum social spending and transfers, tariffs, royalties and dividends from the hydrocarbon sector, lumpsum taxes (proxying excise taxes), and corporate income tax; government subsidizes hydrocarbon prices.
  - Monetary policy: defends the currency peg to the US dollar via an interest rate reaction function.
- Calibration sources: IMF’s World Economic Outlook database, Government Fiscal Statistics, OECD databases, IMF government debt and net foreign asset holdings, and Qatar’s Planning and Statistics Authority (PSA). Steady-state calibration heavily dependent on hydrocarbon production.

### Annex IV — Potential Reforms Quantified in MCDMOD (Selected Calibrations)
- Labor Market Policies (potential reform; short term effect on demand; calibrated magnitudes):
  - Increase multifactor productivity: 10.0 percent.
  - Increase employment rate – employment / working age population: 5.2 percentage points (investment in human capital, decreasing share of low-skilled non-Qatari workers).
  - Increase multifactor productivity (investment in human capital references): 10.0 percent (sources: Lutz (2008), Martins (2019), Rovo (2020), Varga (2013)).
  - Increase in Qatari female participation rate: 10.0 percentage points (IMF staff assumption for MCDMOD).
- Doing Business Policies (potential reform; short term effect on demand; calibrated magnitudes):
  - Reduction in regulatory barriers (enhanced regulatory efficiency): increase multifactor productivity by 0.70 percent.
  - Opening the economy to competition: increase multifactor productivity by 1.2 percent (Égert and Gal (2016)).
  - Employment rate effect from regulatory reforms: 0.14 percentage points.
  - Credit bureau improving dissemination of firm creditworthiness: corporate risk premium change of -1.0 percentage points (IMF staff assumption for MCDMOD).
- Supply-side shocks represented include strengthening job search assistance, training and wage subsidy programs (Bouis (2011, 2012), Égert and Gal (2016), Sanchez (2016)), and reductions in regulatory barriers (Égert and Gal (2016)).

*Source: IMF staff analysis as presented in the working paper "From HydroCarbon to Hightech: Mapping the Economic Transformation of Qatar."*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2024/english/sipea2024010.pdf_