## _cr0928

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### Executive summary — recent developments
- Real GDP growth in 2008: 16 percent.
- Inflation in 2008: 15 percent.
- Broad money projected increase in 2008: almost 40 percent.
- Overall fiscal surplus in FY2007–08: 12 percent of GDP.
- External current account surplus in 2008: about 37 percent of GDP.
- Imports growth in 2008: 47 percent.
- Interbank one-month weighted-average rates rose by about 350 basis points between August and October 2008.
- Commercial banks’ deposits with the central bank in various forms: $6 billion.
- Government authorization: Qatar Investment Authority (QIA) to purchase up to 20 percent (about $5.3 billion) of enhanced share capital of listed banks on the Doha Securities Market (except Qatar National Bank).

### Banking sector indicators (national conventional banks)
- Capital adequacy (2005–2008): 24.8, 14.3, 13.5, 17.0 (in percent).
- Return on assets (2005–2008): 4.3, 3.7, 3.6, 2.4 (in percent).
- Gross NPLs to total loans (2005–2008): 4.3, 2.2, 1.5, 1.0 (in percent).
- Provision for NPLs (2005–2008): 84.3, 94.0, 90.7, 91.0 (in percent).
- Return on equity (2005–2008): 28.5, 27.2, 30.4, 21.7 (in percent).

### Authorities’ positions and actions
- Priority: contain inflation.
- Vigilance: stand ready to take any action required to preserve financial stability.
- Committed to implementation of ongoing investment projects; willing to increase government capital spending if needed.
- Exchange rate: reiterated commitment to maintaining a peg to the U.S. dollar in the period leading up to the GCC Monetary Union.
- Unified financial services regulator: implementation likely more gradual than initially envisaged.

### Staff recommendations (executive summary)
- Continue proactively managing vulnerabilities and expectations from the global crisis.
- Build an early warning system for banking system risks; conduct stress tests for combinations of risks and publish results periodically.
- Contain government current expenditure and phase implementation of new investments as part of inflation management; apply freeze on rent increases and price controls only temporarily.
- Maintain the peg to the U.S. dollar during period leading up to monetary union in 2010.
- Improve quality of macroeconomic statistics and provision of international investment position data to the Fund.

### Medium-term outlook and risks (summary)
- Real GDP growth projection for 2009: 29 percent.
- Inflation projection for 2009: 10 percent.
- Oil price projection used for 2009 baseline in staff report: $54 a barrel.
- Fiscal and external current accounts projected to remain in surplus in 2009.
- Projected average output growth through 2013: 12 percent a year.
- Downside risks identified:
  - A prolonged crisis in the global financial system.
  - Persistently lower oil prices.
  - A large decline in real estate prices (possible trigger: mismatch in supply plans and future demand).
  - An escalation of geopolitical tensions.
- Scenario analysis:
  - Scenario (a): 5 percent reduction in LNG production in 2009 and 2010 (delay of one train).
  - Scenario (b): scenario (a) plus an oil price of $45 dollar a barrel in 2009 and thereafter increasing proportionately with current futures prices.
  - In both scenarios, expenditure profile assumed unchanged; simulations show continued double-digit growth in non-oil real GDP and continued fiscal and current account surpluses at lower levels.

### Investment plans and capacity
- Committed investments expected by 2012: $150 billion, of which $100 billion in hydrocarbon and related manufacturing sectors.
- GCC medium-term large investment projects aggregate showing Qatar projects totaling $215,726 million.

---

### A. Impact of the global financial crisis — policy discussions
- Authorities do not anticipate a strong impact of the global financial crisis on Qatar.
- Financial market changes observed:
  - Equity prices have fallen.
  - Credit default swap spreads widened: 150 basis points.
  - Interbank rates increased moderately.
- Investor sentiment (domestic and foreign): remain strong.
- Hydrocarbon investments: largely firm and unlikely to be affected because LNG committed under long-term contracts.
- Non-hydrocarbon investments with financing secured to continue, including manufacturing, transportation (airways), building and construction (Lusail, Pearl, Barwa), and other infrastructure (ports and airport).
- Fiscal/price sensitivity:
  - In FY 2009/10, estimated cost of maintaining public spending about 3 percent of GDP assuming an additional OPEC cut (10 percent) and a $45 a barrel oil price in 2009.
- Financial sector arrangements and readiness:
  - Central bank conducts monthly stress testing; results show measured risks manageable.
  - Plan to publish results through an annual financial stability report.
  - Central bank Financial Crisis Committee meets daily; coordination committee (central bank governor and Minister of Economy and Finance) meets weekly; high-level committee involves the prime minister.
  - Central bank stands ready to provide liquidity to prevent bank runs and to implement crisis resolution measures including bank mergers.
  - Regional cooperation: GCC countries agree to support respective financial systems.
- Market-management measures:
  - Introduction of an overnight liquidity window at 3 percent.
  - Central bank preparing list of acceptable instruments to facilitate collateralized lending.
  - Use of moral suasion to encourage public entities to increase deposits in commercial banks without demanding higher interest rates.

### Box 2 — Qatar’s banking system (key points and statistics)
- System composition: 16 banks total: 6 conventional, 3 Islamic, 7 foreign.
- Conventional banks’ assets share: 80 percent of total bank assets; Islamic and foreign banks: 10 percent each.
- Regulatory capital adequacy requirement: 10 percent.
- National banks: under Basel II guidelines; foreign banks: risk-weighted capital requirements based on home-country provisions.
- Z-index (proxy for risk taking) increased from 2.6 to 3.8 between 2002 and 2007.
- Average one-year weighted deposit rates (2004–07): rose from 3.2 percent to 4.8 percent.
- Average 1–3 year weighted lending rate (2004–07): declined from 9.8 percent to 8.9 percent.
- Customer deposits represented 64 percent of non-equity funding in 2007.
- Funding Volatility Ratio (FVR) indicated potential liquidity problems under stress; FVR defined as (volatile liabilities–liquid assets) / (total assets–liquid assets).
- Central bank: need to continue periodic stress tests and proactive monitoring.

### B. Inflation — outlook and monetary policy
- Inflation expected to ease in 2009 as international food and raw material prices decline and domestic rents stabilize.
- Monetary policy stance: central bank to calibrate interest rate and liquidity instruments to reduce inflation while avoiding choking off asset, credit, and deposit growth.
- QCB did not reduce policy rates on the last two occasions (since September 2008) when the Federal Reserve cut rates.
- Reserve requirements increased by 2 percentage points in 2008.
- QCB issuing CDs with maturities of one-, three-, six-, and nine-months; planning 14-day fixed rate CDs.
- Central bank regulation reduced proportion of consumer credit.
- Prudential norms maintained: limits to real estate lending, loan-deposit ratio, and liquidity ratio.
- Authorities consulting on issuance of government bonds to improve debt management and money market flexibility.

### Box 3 — Economic growth and inflation trade-off (key results)
- Estimated threshold inflation level for a sample of 165 countries: 12 percent, above which a doubling of inflation decreases real GDP by 1.5 percent per year.
- For oil exporters, threshold inflation level: 10 percent; above that, a doubling of inflation reduces real GDP growth by about 1.5 percent per year.
- Using non-oil GDP, threshold estimated at 12 percent; a doubling of inflation from above that threshold decreases non-oil real GDP by about 1.5 percent per year.
- Estimation details:
  - No obs.: 1068 (Emerging and developing economies), 204 (Oil Producers), 322 (Effect on non-oil real GDP).
  - No. countries: 136 (a), 26 (b), 65 (c).
  - β_high: -0.022*** for (a) and (b); -0.023*** for (c).

### C. Financial sector development and unified regulator
- Authorities committed to establishing a unified Financial Regulatory Authority (FRA) combining QCB, Qatar Financial Markets Authority, and QFCRA functions.
- Progress on policy and legal framework, information sharing, and convergence of rulebooks into unified standards.
- Parliamentary legislation proposing creation of FRA submitted to parliament; full implementation likely more gradual than initially envisaged.
- AML/CFT assessment adopted by FATF and MENAFATF in 2008; authorities determined to make legal framework improvements per recommendations.

### D. Exchange rate issues
- Authorities reiterated commitment to U.S. dollar peg; rationale: 90 percent of Qatar’s exports invoiced in U.S. dollars.
- Views on switching to a currency basket: challenging amid global turmoil; authorities not convinced U.S. dollar depreciation was a major contributor to inflation in Qatar.
- Staff assessment: exchange rate may be somewhat undervalued (see Box 4).
- Box 4 — REER and assessment key points:
  - REER appreciated by 15 percent since 2004, reversing an 8 percent depreciation during 2001–03.
  - Equilibrium exchange rate approach: riyal broadly in line with fundamentals.
  - Macroeconomic balance approach: suggests some undervaluation.
  - External sustainability approach (ESA): suggests some overvaluation; indicates need to run sizeable but declining budget and current account surpluses to transform oil wealth into financial assets.
  - ESA assumptions: 27 billion barrels of oil reserves; 18.7 billion tons of gas reserves; 1.5 percent annual decrease in oil production and no growth in gas production after 2013; annual average real GDP growth of 3.5 percent; increase in non-oil GDP deflator of 3.5 percent; rate of return on external assets at 8 percent.
  - Oil price movement: about $70 a barrel in August 2007 → $147 a barrel in July 2008 → $90 a barrel in mid-September 2008 → under $60 a barrel in mid-November 2008.

### E. GCC Monetary Union
- Qatar committed to monetary union with GCC countries; implementation may take longer than planned.
- Areas requiring progress: coordination of monetary/exchange rate/reserves policy; integration of clearing and settlement systems; common supervisory and regulatory standards; transition to new currency; harmonization and compilation of regional economic statistics.
- Operationalizing common market identified as important milestone.
- Authorities view: global financial crisis would not adversely impact decision to establish GCC Monetary Union.

---

### Structural reforms and statistics
- Diversifying revenue base: authorities view expanding non-oil revenue as important.
- Tax policy considerations:
  - Considering lowering corporate tax rate for foreign companies from 35 percent to 10 percent while implementing initial low rate for national companies, aiming to unify tax rates in future.
  - Studying introduction of a value-added tax (VAT) as part of a GCC-wide initiative.
  - Considering revision of tax holiday policy to significantly reduce benefits.

### Data provision and statistical improvements
- Authorities compiling and publishing quarterly nominal GDP data; plan to publish a monthly CPI; updating CPI weights and items.
- Introducing an international transactions reporting system (ITRS) for external positions of reporting financial corporations.
- Central bank plans to improve BOP coverage and compilation are progressing more slowly than envisaged; assessing technical assistance needs.
- QIA does not disclose financial information on its activities.
- Staff urges improvement in provision of IIP data to the Fund, prioritizing expanded reporting requirements for financial and other corporations and government agencies.

### Staff’s IIP estimate and QIA disclosure
- Staff estimate (based on BOP and fiscal accounts) suggests Qatar’s net public IIP, excluding unknown private sector foreign claims and liabilities, is of the order of $70 billion.
- Authorities indicated they will provide an oral statement on QIA foreign assets to the Board.

### Staff appraisal — growth drivers and near-term outlook
- Qatar is fastest growing economy in the GCC and has managed the impact of the global financial crisis to date.
- Near-term growth expected to remain rapid, driven by LNG expansion and investments for diversification.
- Fiscal and external current accounts projected to remain in surplus.
- Main risks: continued equity price falls and construction sector project-financing interruptions.
- Recommendation: continue proactively managing expectations and vulnerabilities from the global crisis.

### Fiscal policy recommendations
- Support capacity building and easing supply bottlenecks to contain inflation.
- Continue containing government current expenditure and phase new investment projects to slow aggregate demand growth if needed.
- Freeze on rent increases and price controls are distortionary and should be temporary.
- Fiscal expansion projected to moderate over the medium term mainly via decline in current expenditures relative to non-hydrocarbon GDP.
- If global crisis persists, government may need to increase infrastructure spending temporarily to support demand.

### Financial sector soundness and monitoring
- Continue monthly stress testing by central bank and consider publishing results regularly.
- Build an early warning system; gather better and more inclusive data to assess risk combinations (credit, equity, real estate) and oil price shocks.

### Regulatory reform and transitional arrangements
- Given global crisis, implementing a unified regulator may be more appropriate after international regulatory strengthening; interim measures required:
  - QCB, Ministry of Economy and Finance, and new regulator to agree on a tri-partite memorandum of understanding.
  - Resolve payments system access for QFC-licensed institutions.
  - Implement effective monitoring to close regulatory gaps during transition.
  - Establish mechanism for QFC to report financial statistics of QFC-licensed institutions to QCB during transition.

### Exchange rate policy (staff view)
- Support for maintaining peg to U.S. dollar through formation of GCC Monetary Union in 2010.
- Peg has facilitated growth and macro stability.
- If inflation persists and U.S. dollar depreciates for a sustained period, authorities may need to consider other options such as pegging to a currency basket.

### External borrowing and market development
- External borrowing by financial institutions and large corporations rising sharply; needs close monitoring and adequate regulatory oversight.
- Authorities should proceed with plans to develop a government bond market to add market depth, permit development of a benchmark yield curve, help banks manage liquidity, and pave way for corporate bond market.

### Statistical priorities and coordination
- Priorities: improve balance of payments financial account data; enhance timeliness and availability of public sector operations data; improve coordination across government agencies.
- Continue progress made under GDDS participation.

---

### Selected macroeconomic indicators (highlights)
- Nominal GDP (million Qatari riyals) series (2004–2009): 115,512; 154,565; 207,183; 258,590; 367,957; 408,554.
- Nominal GDP (million U.S. dollars) series (2004–2009): 31,734; 42,463; 56,918; 71,041; 101,087; 112,240.
- Nominal GDP per capita (U.S. dollars): 41,949; 53,333; 67,922; 76,374; 92,097; 92,125.
- Real GDP growth (percent per annum): 17.7; 9.2; 15.0; 15.3; 16.4; 29.0.
- LNG production (million tons per year): 18.9; 21.2; 24.7; 27.4; 34.9; 65.0.
- Oil export price (U.S. dollars per barrel): 35.19; 51.69; 62.93; 70.02; 98.19; 53.40.
- CPI period average: 6.8; 8.8; 11.8; 13.8; 15.1; 10.0.

### Public finance summary (selected items, fiscal years 2004/05–2008/09)
- Total revenue (million Qatari riyals): 55,065; 65,685; 86,062; 72,457; 117,790; 141,352.
- Hydrocarbon revenue (million Qatari riyals): 36,319; 46,381; 55,429; 42,095; 70,748; 86,257.
- Total expenditure (million Qatari riyals): 36,103; 50,768; 67,147; 65,713; 84,727; 96,083.
- Overall balance (million Qatari riyals): 18,962; 14,917; 18,915; 6,744; 33,063; 45,269.
- Overall balance (percent of GDP, fiscal year basis): 15.1; 8.9; 8.6; 2.4; 11.6; 12.0.
- Nonhydrocarbon fiscal balance (percent of GDP): -13.9; -18.8; -16.6; -16.1; -13.2; -10.8.

### Monetary and external sector (selected)
- Broad money (2005–09, million Qatari riyals): 55,231; 78,901; 110,173; 137,635; 153,735; 195,672; 213,164; 277,480.
- Claims on private sector (2005–09, million Qatari riyals): 33,551; 54,847; 79,102; 107,843; 120,485; 166,482; 181,932; 248,437.
- Trade balance (million U.S. dollars): 13,540; 17,058; 20,272; 24,754; 42,573; 20,073.
- Exports (million U.S. dollars): 18,950; 26,122; 35,083; 44,578; 72,931; 59,539.
  - LNG and related exports (million U.S. dollars): 6,554; 8,738; 13,360; 18,710; 35,617; 37,424.
- Current account (million U.S. dollars): 7,100; 14,100; 16,113; 21,951; 37,457; 13,964.
  - Current account (percent of GDP): 22.4; 33.2; 28.3; 30.9; 37.1; 12.4.
- Central bank reserves, gross (million U.S. dollars): 3,361; 4,572; 5,416; 9,753; 10,775; 13,566.

### Medium-term baseline (selected projections)
- Real GDP growth (percent change) projected 2008–2013: 16.4 (2008); 29.0 (2009); 17.1 (2010); 4.9 (2011); 5.3 (2012); 5.5 (2013).
- LNG production projected (million tons): 34.9 (2008); 65.0 (2009); 78.0 (2010–2013).
- CPI period average projections: 15.0 (2008); 10.2 (2009); 8.2 (2010); 7.3 (2011); 6.2 (2012); 5.1 (2013).
- Overall balance (million Qatari riyals and percent of GDP) projections: 45,269 (12.0 percent) in 2008; 20,972 (4.7 percent) in 2009; 41,738 (7.4 percent) in 2010; 50,799 (7.9 percent) in 2011; 52,825 (7.4 percent) in 2012; 53,257 (7.8 percent) in 2013.
- Current account (million U.S. dollars and percent of GDP) projections: 37,457 (30.9 percent) in 2007; 13,964 (22.4 percent) in 2009; projected percent of GDP declines to 14.3 percent by 2013.

---

### Data, surveillance, and Article IV cycle
- Data provision broadly adequate for surveillance; priorities include improving BOP financial account, IIP, and timeliness of public sector operations data.
- QSA formed to lead statistical development; progress under GDDS but significant gaps remain.
- Staff recommends improving reporting requirements for financial and other corporations and government agencies to facilitate IIP compilation.
- Staff’s IIP estimate: net public IIP of the order of $70 billion (excluding unknown private claims/liabilities).
- Proposed that Qatar remains on the standard 12-month Article IV consultation cycle.

### Statement by IMF Staff Representative (January 21, 2009) — key updates
- WEO baseline revised to $50 a barrel for 2009 (from $54 in staff report).
- OPEC cuts in production ceilings noted; assuming full implementation and unchanged expenditure profile:
  - Real GDP growth impact in 2009 would decline by 1 percentage point to 28 percent.
  - Fiscal surplus decline by 1 percentage point to 3.6 percent of GDP.
  - Current account surplus at 9.4 percent of GDP would be 3 percentage points lower than envisaged.
- Monetary data through November 2008 show comfortable interbank liquidity; interbank rates moved back to below 2 percent.
- Stock market: declined by more than 30 percent since September 10, 2008.
- Real estate: potential for a sharp drop considered less concerning due to excess demand and rental inflation; rent inflation beginning to decline after cap on rents.

### Executive Board assessment and guidance (PIN No. 09/09, January 28, 2009) — key views
- Directors commended macroeconomic performance and resilience.
- Key challenges: reduce high inflation; shield economy from global financial crisis; ensure rapid credit growth does not undermine bank soundness; diversify economy away from hydrocarbon dependence.
- Recommended phasing out distortionary price and rent controls; moderate fiscal expansion and broaden non-oil revenue base; build infrastructure capacity while containing current expenditure.
- Financial sector: continue stress testing, develop early warning systems, upgrade AML/CFT implementation, and advance government bond market development.
- Regulatory reform: proceed gradually with unified regulator, strengthen interim coordination among regulators.
- Exchange rate: peg to U.S. dollar provides a credible anchor; staff found riyal level in line with fundamentals.
- Statistics: urged continued improvements in national income, BOP, and IIP statistics.

*Source: IMF staff and Qatari authorities (Executive Summary, IMF country report; Annexes and staff statement as contained in content unit _cr0928).*

### Executive Summary ......................................................................................................

### Executive Summary

### Recent Economic Developments
- Overall real GDP growth is estimated at 16 percent in 2008, driven by expansions in the production of oil, LNG, and condensates, and a strong performance in manufacturing, construction, and financial services.
- Inflation in 2008 was 15 percent, the highest among GCC countries, with rent and food prices being major contributors.
- Broad money is projected to increase by almost 40 percent in 2008, fueled by large foreign exchange inflows, large public outlays, and a rapid expansion in private sector credit.
- Credit growth accelerated despite implementation of a lower loan-deposit ratio and increases in reserve requirements.
- The overall fiscal surplus was 12 percent of GDP in FY2007–08, reflecting a strong increase in revenue and a slowdown in expenditure relative to FY2006–07.
- The external current account surplus was about 37 percent of GDP, while imports grew by 47 percent.
- Interbank liquidity remained broadly comfortable through October 2008, though weighted-average interbank rates in one-month maturities rose by about 350 basis points between August and October.
- Commercial banks have $6 billion parked with the central bank in the form of reserve requirements, deposits, and Certificates of Deposit (CDs).

Banking sector indicators (national conventional banks)
- Capital adequacy (2005–2008): 24.8, 14.3, 13.5, 17.0 (in percent)
- Return on assets (2005–2008): 4.3, 3.7, 3.6, 2.4 (in percent)
- Gross NPLs to total loans (2005–2008): 4.3, 2.2, 1.5, 1.0 (in percent)
- Provision for NPLs (2005–2008): 84.3, 94.0, 90.7, 91.0 (in percent)
- Return on equity (2005–2008): 28.5, 27.2, 30.4, 21.7 (in percent)

- To strengthen confidence, the government authorized the Qatar Investment Authority (QIA) to purchase up to 20 percent (about $5.3 billion) of the enhanced share capital of listed banks (except the government majority-owned Qatar National Bank) on the Doha Securities Market (DSM).

### Authorities’ Positions and Actions
- Consider containing inflation as a high priority.
- Remain vigilant on financial sector developments and stand ready to take any action required to preserve financial stability.
- Committed to implementation of ongoing investment projects, and willing to increase government capital spending, if needed, to maintain economic activity.
- Noted staff’s assessment that the Qatari riyal might be slightly undervalued, and reiterated commitment to maintaining a peg to the U.S. dollar in the period leading up to the Gulf Cooperation Council (GCC) Monetary Union.
- Indicated that implementation of a unified financial services regulator in Qatar is likely to be more gradual than initially envisaged.

### Staff Recommendations
- Continue to proactively manage vulnerabilities and expectations arising from the global crisis.
- Build an early warning system to identify risks in the banking system. Also conduct stress tests for a combination of risks and publish results on a periodic basis.
- Continue to contain government current expenditure and phase the implementation of new investments as part of inflation management. The freeze on rent increases and price controls is distortionary and should be applied on a temporary basis.
- Maintain the peg to the U.S. dollar during the period leading up to the formation of the monetary union in 2010.
- Improve the quality of macroeconomic statistics and the provision of international investment position data to the Fund to strengthen the effectiveness of the surveillance process.

### Medium-Term Economic Outlook and Risks
- Real GDP growth is projected at 29 percent in 2009, as production of LNG and gas products is expected to almost double with the commissioning by Rasgas of two trains, and construction, manufacturing, financial services, trade and transportation, and communications all projected to grow strongly.
- Inflation is projected to fall to 10 percent in 2009, due to passthrough of declining international prices for food and raw materials and a slower increase in domestic rents owing to a larger supply of low- and middle-income housing.
- The fiscal and external current accounts are projected to remain in surplus in 2009, despite a lower projected oil price of $54 a barrel.
- An expected deceleration in credit growth to the private sector would reflect lingering effects of uncertainties from the global financial turmoil and wealth effects from depressed asset prices.
- Output growth is projected to average 12 percent a year through 2013, supported by increases in LNG, gas-to-liquid (GTLs) and petrochemicals production; expansion in financial services as the single financial market and integrated regulator is implemented; and growth in knowledge-based services associated with the Qatar Foundation.
- Strong revenue growth from the doubling of LNG exports and a stable expenditure profile will help maintain overall fiscal surpluses, with the non-hydrocarbon fiscal balance relative to GDP projected to decline gradually.
- The external current account surplus is expected to narrow reflecting the peaking in production of oil and LNG in 2011, lower oil prices than recent record-highs, and a steady increase in imports. Reserves of the QCB and other official foreign assets would continue to rise.

Downside risks identified
- A prolonged crisis in the global financial system.
- Persistently lower oil prices.
- A large decline in real estate prices (a possible trigger could be a mismatch in current supply plans and future demand, arising from an outflow of foreign workers/expatriates and a decline in demand).
- An escalation of geopolitical tensions.

Scenario analysis
- Scenario (a): a 5 percent reduction in LNG production in 2009 and 2010 (assuming a delay in the production capacity of one train).
- Scenario (b): scenario (a) plus an oil price of $45 dollar a barrel in 2009 and thereafter increasing proportionately with current futures prices.
- In both scenarios, the expenditure profile is assumed unchanged over the medium term. Simulations show Qatar could still maintain on average double-digit growth rates in non-oil real GDP and continue to record fiscal and current account surpluses, although at lower levels.

### Investment Plans and Projected Capacity
- Qatar has committed investments of $150 billion that are expected to be completed by 2012, of which $100 billion are in the hydrocarbon and related manufacturing sectors.
- GCC: Medium-Term Large Investment Projects (aggregate figures) show Qatar projects totaling $215,726 million (i.e., $215.7 billion) across Industry, Infrastructure, Oil and Gas, Petrochemicals, Power and Water, Real Estate, and Total categories.

*Source: IMF staff and Qatari authorities (Executive Summary, IMF country report).*

### 8.      The policy discussions focused on (a) the impact of the global financial crisis on growth

### 8.      The policy discussions focused on (a) the impact of the global financial crisis on growth

### A. Impact of the Global Financial Crisis
- Authorities do not anticipate a strong impact of the global financial crisis on Qatar.
- Financial market changes observed:
  - Equity prices have fallen.
  - Credit default swap spreads have widened (150 basis points).
  - Interbank rates have increased moderately.
- Investor sentiment: domestic and foreign investor sentiment about the economy remain strong.
- Effects of global slowdown and oil price decline:
  - Could weaken overall economic activity somewhat.
  - Most hydrocarbon investments are firm and at various stages of implementation and are unlikely to be affected because the LNG has been committed under long-term contracts.
  - Non-hydrocarbon investments with financing already secured will continue, including:
    - Manufacturing (aluminum, steel, power, water, petrochemicals)
    - Transportation (airways)
    - Building and construction (Lusail, Pearl, Barwa)
    - Other infrastructure (ports and airport)
- Fiscal/price sensitivity:
  - In FY 2009/10, the cost of maintaining public spending would be about 3 percent of GDP, assuming an additional OPEC cut (10 percent) and a $45 a barrel price of oil in 2009.
  - Authorities indicated intention to increase government capital spending beyond ongoing projects, if needed, to sustain economic activity.
- Financial sector vigilance and arrangements:
  - Central bank conducts monthly stress testing of banks; results so far show measured risks are manageable.
  - Plan to publish results through an annual financial stability report.
  - Monitoring and decision bodies:
    - Central bank Financial Crisis Committee meets daily.
    - Coordination committee (including the central bank governor and the Minister of Economy and Finance) meets weekly.
    - High level committee involving the prime minister.
  - Central bank readiness:
    - Stand ready to provide liquidity in case of a run on any bank.
    - Ready to implement crisis resolution measures, including bank mergers, if needed.
  - Regional cooperation: GCC countries agree to support their respective financial systems.
- Market-management measures:
  - Introduction of an overnight liquidity window at 3 percent.
  - Central bank preparing a list of acceptable instruments to facilitate collateralized lending to banks.
  - Monitoring money market conditions and use of moral suasion to urge public entities to increase deposits in commercial banks without demanding higher interest rates.

### Box 2 — Qatar’s Banking System (Key points and statistics)
- System composition:
  - 16 banks total: 6 conventional, 3 Islamic, and 7 foreign.
  - Conventional banks assets constitute 80 percent of total bank assets.
  - Islamic and foreign banks account for 10 percent each.
- Regulatory capital:
  - Regulatory capital adequacy requirement is 10 percent.
  - National banks are under Basel II guidelines; foreign banks’ risk-weighted capital requirements are based on home-country provisions.
- Profitability and risk:
  - Competition creating pressures on banks’ return on assets (RoA); profitability still high owing to strong private sector demand but RoA and ROE eroded by competition and rising costs.
  - Z-index (proxy for risk taking) was low during 2003–07; in Qatar Z-index increased marginally between 2002 and 2007, from 2.6 to 3.8.
- Interest rate and margins:
  - Average one-year weighted deposit rates rose from 3.2 percent to 4.8 percent during 2004–07.
  - Average 1 to 3 year-weighted lending rate declined from 9.8 percent to 8.9 percent during 2004–07.
  - Higher interest rates on customer deposits and lower interest rates on credit facilities reduced net interest margins since 2005.
- Funding and liquidity:
  - Customer deposits represented 64 percent of non-equity funding in 2007.
  - Rapid asset growth and preponderance of customer deposits can pose future vulnerabilities.
  - Funding Volatility Ratio (FVR) pointed to potential liquidity problems in difficult times but not an issue at the time; FVR defined as (volatile liabilities–liquid assets) / (total assets–liquid assets).
- Central bank action: need to continue periodic stress tests and proactive monitoring of bank performance.

### B. Inflation
- Outlook:
  - Authorities and staff agree inflationary pressures likely to ease in 2009 as international food and raw material prices are projected to decline and domestic rents stabilize.
  - As investments come on stream, supply bottlenecks will ease and inflation, expected to remain elevated in the near term, would decline gradually.
- Monetary policy stance:
  - Monetary policy to be managed to achieve a gradual reduction in inflation.
  - Central bank will carefully calibrate interest rate and liquidity instruments to reduce inflation while avoiding choking off growth of assets, credit, and deposits.
  - QCB did not reduce its policy rates on the last two occasions (since September 2008) when the Federal Reserve cut its rates.
  - Reserve requirements have been increased by 2 percentage points in 2008.
  - QCB is issuing CDs for maturities of one-, three-, six-, and nine-months, and planning to issue 14-day fixed rate CDs.
  - Central bank regulation has progressively reduced the proportion of consumer credit.
  - Prudential norms to be maintained: limits to real estate lending, the loan-deposit ratio, and the liquidity ratio.
  - Authorities in consultation with the government on issuance of government bonds to improve debt management and gain greater flexibility in money market operations.

### Box 3 — Economic Growth and Inflation Trade-off (Key results)
- Threshold findings:
  - Estimated threshold inflation level of 12 percent for a sample of 165 countries, above which a doubling of inflation would decrease real GDP by 1.5 percent per year.
  - For oil exporters, the threshold inflation level is estimated at 10 percent; above that threshold a doubling of inflation would reduce real GDP growth by about 1.5 percent per year.
  - Using non-oil GDP, threshold also estimated at 12 percent; a doubling of inflation from above that threshold decreases non-oil real GDP by about 1.5 percent per year.
- Estimation details:
  - No obs.: 1068 (Emerging and developing economies), 204 (Oil Producers), 322 (Effect on non-oil real GDP).
  - No. countries: 136 (a), 26 (b), 65 (c).
  - β_high is -0.022*** (significant at the 1 percent level) for (a) and (b), and -0.023*** for (c).
  - Note: Threshold estimate for the whole sample (165 countries). A threshold of 12 percent corresponds to f(inflation)= ln(1+inflation)=2.6.

### C. Financial Sector Development
- Single financial regulator commitment:
  - Authorities fully committed to establishing a unified Financial Regulatory Authority (FRA) to combine functions of:
    - Qatar Central Bank (QCB) — supervises banks;
    - Qatar Financial Markets Authority — oversees the Doha Securities Market;
    - Qatar Financial Center Regulatory Authority (QFCRA) — regulates QFC-licensed institutions.
  - When created, Qatar will be the second GCC country with a single regulator model (the other is Bahrain).
- Progress and timeline:
  - Steady progress on proposed policy and legal framework, information sharing, and convergence of rulebooks into unified standards.
  - Full implementation likely to be more gradual than initially envisaged.
  - Parliamentary legislation proposing creation of FRA has already been submitted to parliament.
  - Authorities had planned completing transition to single financial regulator by 2010, but full implementation is likely more gradual.
- AML/CFT:
  - Fund’s Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) assessment adopted by both FATF and MENAFATF in 2008 as an AML/CFT mutual evaluation.
  - Authorities determined to make legal framework improvements per the report’s recommendations.

### D. Exchange Rate Issues
- Commitment to U.S. dollar peg:
  - Authorities reiterated commitment to maintaining the peg to the U.S. dollar in the period leading up to the GCC Monetary Union.
  - Rationale: 90 percent of Qatar’s exports are invoiced in U.S. dollars.
- Views on switching to a currency basket:
  - Changing the peg to a basket would require choosing composition and weights — a challenging task amid global economic turmoil.
  - Authorities do not believe U.S. dollar depreciation was a major contributor to inflation in Qatar and are not convinced that a revaluation would solve the inflation problem.
  - Recent appreciation of the dollar against major reserve currencies has weakened the argument for regime change.
- Staff assessment:
  - Staff assessed that the exchange rate may be somewhat undervalued (see Box 4).
- Box 4 — Real Exchange Rate Assessment (key statistics and results):
  - REER movements:
    - REER appreciated by 15 percent since 2004, reversing an 8 percent depreciation experienced during 2001–03.
  - Macro approaches:
    - Equilibrium exchange rate approach suggests Qatari riyal broadly in line with fundamentals.
    - Macroeconomic balance approach suggests some undervaluation.
    - Qatar’s average external current account norm for 2013 estimated at 28 percent of GDP, lower than observed current account surplus of 31 percent of GDP in 2007.
    - Given current futures market trajectory for oil prices, the surplus projected to decline by 2013 to below the level of the norm for 2013.
    - External sustainability approach (ESA) suggests Qatar will have to run sizeable but declining budget and current account surpluses over the medium-to-long term to transform oil wealth into financial assets, suggesting some overvaluation.
  - Assumptions used in preliminary ESA calculations:
    - 27 billion barrels of oil reserves and 18.7 billion tons of gas reserves.
    - 1.5 percent decrease in oil production each year, and no growth in gas production each year after 2013.
    - Annual average growth in real GDP of 3.5 percent.
    - Increase in the non-oil GDP deflator of 3.5 percent.
    - Rate of return on external assets at 8 percent.
  - Oil price context:
    - Oil prices rose from about $70 a barrel in August 2007 to $147 a barrel in July 2008, before falling to $90 a barrel in mid-September 2008 and further to under $60 a barrel in mid-November 2008.

### E. GCC Monetary Union
- Commitment and timeline:
  - Qatar remains committed to moving toward a monetary union with the rest of the GCC countries, but implementation may take longer than initially planned.
- Areas requiring progress:
  - Coordination of monetary, exchange rate, and reserves policy.
  - Integration of clearing and settlement systems and common supervisory and regulatory standards.
  - Issues relating to transition to a new currency.
  - Harmonization and compilation of regional economic statistics.
  - Use of common fiscal criteria complicated by differing oil and gas reserves.
- Progress noted:
  - Operationalizing the common market identified as an important milestone toward economic integration.
- Authorities’ view:
  - Global financial crisis would not have an adverse impact on decision to establish a GCC Monetary Union.

### IV. Structural Reforms and Statistics
- Diversifying revenue base:
  - Authorities believe expanding the non-oil revenue base is important to reduce dependence on the hydrocarbon sector.
- Tax policy considerations:
  - Considering amending current tax law to lower the corporate tax rate for foreign companies from 35 percent to 10 percent while implementing an initial low rate for national companies, with a view to unifying tax rates in the future.
  - Studying introduction of a value-added tax (VAT) as part of a GCC-wide initiative.
  - Considering revision of existing tax holiday policy to significantly reduce benefits.

*Source: IMF staff report chapter on the policy discussions for Qatar (extracted content).*

### 18.      Data provision is broadly adequate for surveillance purposes. The authorities are

### 18.      Data provision is broadly adequate for surveillance purposes. The authorities are

### Data provision and statistical improvements
- Authorities are compiling and publishing quarterly nominal GDP data.
- Authorities plan to publish a monthly consumer price index (CPI).
- Authorities are in the process of updating the weights and items in the CPI basket.
- Authorities are introducing an international transactions reporting system (ITRS) that will provide more comprehensive data on external positions of reporting financial corporations.
- The central bank’s plans to improve the coverage and compilation of balance of payments statistics are not progressing as quickly as envisaged.
- The central bank is currently assessing its technical assistance needs in the area of balance of payments statistics.
- The QIA does not disclose financial information on its activities.
- Staff urges the authorities to improve the provision of IIP data to the Fund, with high priority on expanding reporting requirements for financial and other corporations, as well as government agencies, to facilitate the compilation of IIP statistics.

### QIA, IIP estimate, and disclosure
- Staff’s estimate based on balance of payments and fiscal accounts data suggest that Qatar’s net public International Investment Position (IIP), excluding unknown foreign financial claims and liabilities of the private sector, is of the order of $70 billion.
- The authorities have indicated that they will provide an oral statement on QIA foreign assets to the Board (a similar approach to that followed under the 2007 Article IV consultation).

### Staff appraisal — growth, drivers, and near-term outlook
- Qatar is the fastest growing economy in the GCC region and has so far managed well the impact of the global financial crisis.
- The economy is expected to continue growing at a rapid pace in the near future, driven by a rapid expansion in LNG production (and related industries) and in investments aimed at economic diversification.
- The fiscal and external current accounts are projected to remain in surplus.
- The extent of the global financial crisis and the trend in oil prices will determine the medium-term policy mix and the accumulation of reserves in the QIA.
- Main risks identified:
  - Financial sector risk if the fall in equity prices continues.
  - Construction sector risk if some of the projects cannot be completed because of reduced availability of financing.
- Recommendation: Authorities should continue to proactively manage expectations and vulnerabilities arising from the global crisis.

### Fiscal policy and recommendations
- Staff supports the authorities’ strategy to build capacity and ease supply bottlenecks to contain inflation.
- Staff underscores the need to continue containing government current expenditure and to phase the implementation of new investment projects, if needed, to slow the growth in aggregate demand.
- Freeze on rent increases and price controls on some commodities and raw materials could help contain short-term inflationary pressures but are likely to generate costly distortions and should be applied as temporary measures.
- Fiscal expansion is projected to moderate over the medium term, particularly through a decline in current expenditures relative to non-hydrocarbon GDP.
- The decline reflects containment of wage increases and spending on other goods and services.
- Authorities are committed to completing committed investments in both hydrocarbon and non-hydrocarbon sectors, which could sustain fiscal expansion.
- If the global crisis persists, government may need to resort to fiscal stimulus by increasing spending further on infrastructure projects to support demand and reduce negative feedback between the real and financial sectors.

### Financial sector soundness and monitoring
- Recent global events demonstrate market sentiment can change even if banks are sound and profitable; safeguarding banking system soundness is crucial.
- Staff welcomes the monthly stress testing of the banking system by the central bank, and encourages authorities to consider publishing them on a regular basis in the future.
- Although tests so far show measured risks are manageable and unlikely to derail the banking system, care must be taken to closely monitor and assess:
  - various combinations of risks, including credit, equity, and real estate shocks; and
  - economic risks from oil price shocks.
- Recommendation: Build an early warning system—starting point being better and more inclusive efforts at gathering data for assessing risk.

### Regulatory reform and transitional arrangements
- Given the current global crisis and the authorities’ commitment to establish a unified regulator for financial services, it would be more appropriate to implement this after proposals for strengthening the international financial regulatory framework have been agreed upon.
- Interim measures required:
  - QCB, the Ministry of Economy and Finance, and the new regulator should agree on a tri-partite memorandum of understanding spelling out respective responsibilities.
  - Resolve the issue of access to the payments system by QFC-licensed institutions.
  - Effective monitoring to close regulatory gaps during the transition period and establish procedures to deal promptly with issues arising from increased market competition.
  - Suggestion: Put in place a formal mechanism for the QFC to report (during the transition period) to the QCB the financial statistics of QFC-licensed institutions.

### Exchange rate policy
- Staff supports Qatar’s commitment to maintain the peg to the U.S. dollar during the period leading up to the formation of the GCC Monetary Union in 2010.
- The peg has facilitated growth and macroeconomic stability and anchored monetary policy.
- Inflationary experience of the last two to three years has highlighted complications for macroeconomic management when economic cycles and policy needs differ from that of the anchor country.
- Recently, the argument for a revaluation of the riyal has been significantly reduced as international prices for food and raw materials have declined, and the U.S. dollar has appreciated against major currencies.
- Staff view: If inflation persists in the period leading up to the monetary union, and the value of the U.S. dollar reverses course (depreciates) for a sustained period, the authorities may need then to consider other options, such as pegging to a basket of currencies.

### External borrowing and market development
- External borrowing by financial institutions and large corporations needs to be monitored closely.
- Presently there are no signs of vulnerability associated with external borrowing, given Qatar’s large net creditor position, but the level of external debt has been rising sharply.
- Authorities need to monitor the situation by collecting data and maintaining adequate regulatory oversight.
- Authorities should move ahead with plans to develop a government bond market.
  - Availability of government bonds would add depth to the financial market, permit development of a benchmark yield curve, allow banks to better manage liquidity, and eventually pave the way for a corporate bond market.

### Statistical priorities and coordination
- Given increasing integration with the global economy and the proposed GCC Monetary Union, authorities should continue to improve the quality of macroeconomic statistics.
- Building on progress made through participation in the GDDS, priority should be given to:
  - improving the balance of payments financial account data;
  - enhancing the timeliness and availability of data on public sector operations; and
  - improving coordination across government agencies.

*Source: IMF staff report excerpt (section 18 and V. STAFF APPRAISAL) contained in the provided content unit.*

### 28.      It is proposed that Qatar remains on the standard 12-month Article IV consultation cycle.

### _cr0928 - 28.      It is proposed that Qatar remains on the standard 12-month Article IV consultation cycle.

### Article IV consultation cycle
- It is proposed that Qatar remains on the standard 12-month Article IV consultation cycle.

### Selected macroeconomic indicators (2004–09)
- Nominal GDP (in million Qatari riyals): 115,512; 154,565; 207,183; 258,590; 367,957; 408,554 (Est., Proj., Proj. for 2004–2009 respectively as shown).
- Nominal hydrocarbon GDP (in million Qatari riyals): 62,922; 92,071; 118,707; 146,143; 219,760; 223,967.
- Nominal GDP (in million U.S. dollars): 31,734; 42,463; 56,918; 71,041; 101,087; 112,240.
- Nominal GDP per capita (in U.S. dollars): 41,949; 53,333; 67,922; 76,374; 92,097; 92,125.
- Nominal GDP growth (in percent per annum): 34.8; 33.8; 34.0; 24.8; 42.3; 11.0.
- Real GDP growth (in percent per annum): 17.7; 9.2; 15.0; 15.3; 16.4; 29.0.
- Hydrocarbon real growth: 12.5; 6.0; 10.7; 16.2; 18.2; 43.9.
- Nonhydrocarbon real growth: 24.6; 13.1; 19.9; 14.5; 14.5; 13.0.
- Crude oil output (in thousand barrels per day): 753; 760; 803; 839; 855; 855.
- LNG production (in million tons per year): 18.9; 21.2; 24.7; 27.4; 34.9; 65.0.
- Oil export price (in U.S. dollars per barrel): 35.19; 51.69; 62.93; 70.02; 98.19; 53.40.
- CPI period average: 6.8; 8.8; 11.8; 13.8; 15.1; 10.0.

### Public finance summary (selected items, fiscal years 2004/05–2008/09 and percent of GDP)
- Total revenue (in million Qatari riyals): 55,065; 65,685; 86,062; 72,457; 117,790; 141,352.
- Hydrocarbon revenue (in million Qatari riyals): 36,319; 46,381; 55,429; 42,095; 70,748; 86,257.
- Other revenue (in million Qatari riyals): 18,745; 19,304; 30,634; 30,361; 47,042; 55,095.
- Total expenditure (in million Qatari riyals): 36,103; 50,768; 67,147; 65,713; 84,727; 96,083.
- Current expenditure (in million Qatari riyals): 28,270; 32,755; 49,751; 44,733; 50,923; 55,609.
- Development expenditure (in million Qatari riyals): 7,833; 18,013; 17,396; 20,980; 33,804; 40,474.
- Overall balance (in million Qatari riyals): 18,962; 14,917; 18,915; 6,744; 33,063; 45,269.
- Nonhydrocarbon fiscal balance (in million Qatari riyals): -17,358; -31,464; -36,514; -46,134; -37,685; -40,988.
- Nominal GDP (on a fiscal year basis, in million Qatari riyals): 125,275; 167,719; 220,035; 285,932; 285,932; 378,106.
- Total revenue (percent of GDP, fiscal year basis): 44.0; 39.2; 39.1; 25.3; 41.2; 37.4.
- Hydrocarbon revenue (percent of GDP): 29.0; 27.7; 25.2; 14.7; 24.7; 22.8.
- Total expenditure (percent of GDP): 28.8; 30.3; 30.5; 23.0; 29.6; 25.4.
- Overall balance (percent of GDP): 15.1; 8.9; 8.6; 2.4; 11.6; 12.0.
- Nonhydrocarbon fiscal balance (percent of GDP): -13.9; -18.8; -16.6; -16.1; -13.2; -10.8.
- Memorandum: Government external debt (in million Qatari riyals): 13,614; 12,699; 11,014; ...; 9,330; 7,782.

### Depository corporations and monetary aggregates (2005–09, in million Qatari riyals)
- Net foreign assets (total): 31,812; 47,820; 61,250; 53,856; 61,444; 79,696; 73,964; 80,538 (Est., Proj. series).
- QCB net foreign assets (QCB assets and liabilities separated): QCB assets 12,233; 16,643; 19,715; 22,787; 35,500; 39,221; 39,221; 49,382.
- Commercial banks net foreign assets (assets and liabilities separated): commercial bank assets 27,756; 41,648; 66,311; 78,389; 88,961; 109,847; 97,587; 104,047; liabilities 8,169; 10,407; 24,754; 47,125; 62,265; 69,305; 62,776; 72,823.
- Net domestic assets: 23,419; 31,081; 48,923; 83,779; 92,292; 115,977; 139,200; 196,943.
- Domestic credit: 38,170; 61,079; 88,986; 135,647; 147,944; 199,686; 215,136; 283,840.
- Claims on private sector: 33,551; 54,847; 79,102; 107,843; 120,485; 166,482; 181,932; 248,437.
- Broad money: 55,231; 78,901; 110,173; 137,635; 153,735; 195,672; 213,164; 277,480.
- Money (narrow): 16,373; 25,657; 33,492; 38,947; 43,499; 61,265; 67,881; 96,523.
- Quasi-money: 38,858; 53,244; 76,681; 98,688; 110,237; 134,408; 145,283; 180,958.
- Savings and time deposits: 22,822; 28,409; 39,622; 53,345; 69,508; 84,010; 100,767; 131,202.
- Foreign currency deposits: 16,036; 24,836; 37,059; 45,344; 40,729; 50,398; 44,517; 49,756.

### External sector and balance of payments (2005–09, in million U.S. dollars)
- Trade balance: 13,540; 17,058; 20,272; 24,754; 42,573; 20,073.
- Exports: 18,950; 26,122; 35,083; 44,578; 72,931; 59,539.
  - Crude oil and refined petroleum products: 9,702; 14,122; 17,840; 21,178; 30,668; 16,919.
  - LNG and related exports: 6,554; 8,738; 13,360; 18,710; 35,617; 37,424.
  - Other exports: 2,694; 3,261; 3,883; 4,690; 6,646; 5,196.
- Imports: -5,410; -9,064; -14,811; -19,824; -30,358; -39,466.
- Current account: 7,100; 14,100; 16,113; 21,951; 37,457; 13,964.
  - Current account in percent of GDP: 22.4; 33.2; 28.3; 30.9; 37.1; 12.4.
- Central bank reserves, gross (in million U.S. dollars): 3,361; 4,572; 5,416; 9,753; 10,775; 13,566.
  - In months of imports of goods and services: 3/ 3.2; 2.5; 2.4; 2.9; 2.5; 2.6.
- Total external debt (including commercial banks, in million U.S. dollars): 15,011; 20,422; 29,824; 47,162; 60,680; 62,043.
  - In percent of GDP: 47.3; 48.1; 52.4; 66.4; 60.0; 55.3.
- Government external debt (in million U.S. dollars): 4,017; 3,743; 3,333; 2,871; 2,436; 1,261.
  - In percent of GDP: 12.7; 8.8; 5.9; 4.0; 2.4; 1.1.
- Debt service (in percent of exports of goods and services): 8.7; 7.5; 7.5; 5.9; 3.9; 6.4.

### Balance of payments detailed (2005–09)
- Current account (in million U.S. dollars): 14,100; 16,113; 21,951; 37,457; 13,964 (Est., Proj. series).
  - Trade balance: 17,058; 20,272; 24,754; 42,573; 20,073.
  - Exports: 26,122; 35,083; 44,578; 72,931; 59,539.
    - Hydrocarbon exports: 22,861; 31,200; 39,888; 66,285; 54,342.
    - Crude oil: 12,843; 16,299; 19,181; 27,412; 14,908.
    - LNG: 5,200; 8,471; 10,524; 14,719; 22,968.
  - Imports: -9,064; -14,811; -19,824; -30,358; -39,466.
  - Services (net): -924; -2,763; -542; -1,314; -541.
  - Income (net): 542; 2,341; 1,524; 1,856; 2,171.
  - Transfers (net): -2,576; -3,736; -3,785; -5,658; -7,738 (of which workers remittances -3,006; -3,914; -3,165; -4,548; -5,954).
- Financial account (in million U.S. dollars): -6,325; -8,598; -14,670; -34,756; -9,316.
  - Direct investment, net: 2,500; 3,500; 4,700; 6,700; 7,200.
  - Portfolio borrowing, net: 1,225; 234; 794; -137; 254.
  - Other investment (net): -4,925; -7,286; -10,883; -18,227; -18,865.
  - Government external assets (increase -): -10,102; -13,175; -18,521; -27,932; -21,522.
- Overall balance (in million U.S. dollars): 1,196; 855; 4,136; 1,211; 2,791.
- Change in QCB net foreign assets: -1,196; -855; -4,136; -1,211; -2,791.

### Vulnerability indicators and medium-term baseline (2003–13, selected items)
- REER (CPI based - end of period): -5.7; -0.17; 7.1; 8.3; 3.2.
- Total debt (in billion U.S. dollars, including commercial banks): 13.4; 15.0; 20.4; 29.8; 47.2.
  - LNG-related debt (in billion U.S. dollars): 2.6; 2.4; 6.7; 10.9; 15.8.
- Total debt (in percent of GDP): 56.7; 47.3; 48.1; 52.4; 66.4.
- Debt service/exports of goods and services: 23.8; 8.7; 7.5; 7.5; 5.9.
- Government gross domestic debt/GDP: 22.3; 14.8; 10.2; 7.4; 5.1.
- Government net domestic debt/GDP 1/: 32.9; 20.6; 14.0; 9.2; 4.9.
- Government external debt/GDP (fiscal year basis): 15.9; 10.9; 7.6; 5.0; 3.3.
- Total debt service/total revenue: 11.9; 8.7; 8.0; 7.2; 3.0.
- Interest payments/total revenue: 6.3; 3.4; 2.9; 2.3; 1.6.
- Hydrocarbon revenue/total revenue: 64.3; 66.0; 70.6; 64.4; 60.1.
- Central bank net reserves (in million U.S. dollars): 2,873; 3,358; 4,555; 5,410; 9,546.
  - In months of imports: 4.1; 3.2; 2.5; 2.4; 2.9.
- Financial sector indicators: Foreign currency deposits/total deposits: 26.8; 30.5; 32.7; 34.9; 27.3.
- Market assessment/financial market indicators: Stock market index (end of period) 2003–2007: 3,947; 6,494; 11,053; 7,133; 9,580.
- Credit ratings (Moody's / S&P long-term foreign currency): Moody's A3; A3; A1; Aa2; Aa2. Standard and Poor's A+; A+; A+; AA-; AA-.

### Medium-term baseline projections (2005–13, selected items)
- Nominal GDP (in million Qatari riyals) projected: 154,565 (2005); 207,183 (2006); 258,590 (2007); 367,957 (2008); 408,554 (2009); 546,477 (2010); 623,957 (2011); 693,708 (2012); 761,943 (2013).
- Real GDP (percent change): 9.2; 15.0; 15.3; 16.4; 29.0; 17.1; 4.9; 5.3; 5.5.
- Hydrocarbon real growth (percent change): 6.0; 10.7; 16.2; 18.2; 43.9; 20.2; 0.2; 0.5; 0.4.
- Nonhydrocarbon GDP real growth (percent change): 13.1; 19.9; 14.5; 14.5; 13.0; 12.8; 11.7; 11.5; 11.4.
- Crude oil production (thousand barrels per day) projected: 760; 803; 839; 855; 855; 1,000; 967; 931; 931.
- LNG production (million tons) projected: 21.2; 24.7; 27.4; 34.9; 65.0; 78.0; 78.0; 78.0; 78.0.
- Qatar oil export price (U.S. dollars per barrel) series: 51.7; 62.9; 70.0; 98.2; 53.4; 63.7; 70.1; 73.8; 76.3.
- CPI period average projections: 8.8; 11.8; 13.8; 15.0; 10.2; 8.2; 7.3; 6.2; 5.1.
- Central government finances (medium term, in million Qatari riyals): Total revenue 65,685; 86,062; 117,790; 141,352; 133,611; 178,858; 203,567; 218,701; 223,020. Total expenditure 50,768; 67,147; 84,727; 96,083; 112,639; 137,120; 152,768; 165,875; 169,763.
- Overall balance (in million Qatari riyals and percent of GDP): 14,917 (8.9 percent); 18,915 (8.6 percent); 33,063 (11.6 percent); 45,269 (12.0 percent); 20,972 (4.7 percent); 41,738 (7.4 percent); 50,799 (7.9 percent); 52,825 (7.4 percent); 53,257 (7.8 percent).
- Nonhydrocarbon balance (in million Qatari riyals and percent of GDP): -31,464; -36,514; -37,685; -40,988; -47,437; -54,042; -57,665; -59,653; -63,413. In percent of nonhydrocarbon GDP: -45.6; -38.7; -31.0; -26.1; -24.4; -22.9; -20.4; -17.9; -16.3.
- Government net debt (in million U.S. dollars and percent of GDP): 21,601; 18,987; 12,790; 9,390; 2,624; 4,461; 40; -1,268; -2,049. In percent of GDP: 14.0; 9.2; 4.9; 2.6; 0.6; 0.8; 0.0; -0.2; -0.3.
- Current account (in million U.S. dollars and percent of GDP): 14,100; 16,113; 21,951; 37,457; 13,964. In percent of GDP: 33.2; 28.3; 30.9; 37.1; 22.4; 22.6; 21.5; 17.1; 14.3.
- Central bank reserves, net (in million U.S. dollars): 4,555; 5,410; 9,546; 10,757; 13,548; 16,426; 24,648; 27,996; 31,144.
  - In months of imports of goods and services (next 12 months): 2.5; 2.4; 2.4; 2.9; 2.5; 2.6; 3.3; 3.3; 3.4.
- Total external debt (excluding banks, in million U.S. dollars): 17,563; 23,024; 30,056; 37,732; 42,037; 54,980; 68,773; 82,082; 95,285.
  - Total external debt (excluding banks, percent of GDP): 41.4; 40.5; 42.3; 37.3; 37.5; 36.6; 40.1; 43.1; 45.5.
  - Total external debt (including banks, percent of GDP): 48.1; 52.4; 66.4; 60.0; 55.3; 54.4; 57.9; 60.9; 63.3.
- Saving-investment balance: Gross investment 35.5; 31.7; 33.8; 30; 35; 32; 31; 30; 28. Nongovernment sectors 25.5; 23.2; 22.4; 19; 24; 21; 21; 19; 19. Gross national saving 68.7; 60.0; 64.7; 67; 48; 54; 53; 47; 42.

*Sources: Data provided by the authorities; Qatar Central Bank (QCB); Ministry of Economy and Finance; and IMF staff estimates and projections.*

### ANNEX I. QATAR: FUND RELATIONS

### _cr0928 - ANNEX I. QATAR: FUND RELATIONS

### Membership and Quota
- Status: Joined 09/08/72; Article VIII, 06/04/73
- Quota (General Resources Account):
  - Quota: 263.80 SDR million (100.00 percent)
  - Fund holdings of currency: 230.48 SDR million (87.37 percent)
  - Reserve position in Fund: 33.32 SDR million (12.63 percent)

### SDR Department
- Net cumulative allocation: 12.82 SDR million (100.00 percent)
- Holdings: 29.33 SDR million (228.76 percent)

### Outstanding Obligations and Safeguards
- Outstanding Purchases and Loans: None
- Projected Obligations to the Fund: None
- Implementation of HIPC Initiative: Not applicable
- Safeguards Assessments: Not applicable
- Resident Representative: None

### Exchange Arrangements
- The Qatari riyal has been pegged to the U.S. dollar at QR 3.64 = $1.00 since July 2002 (following an unofficial peg since June 1980).
- Qatar has accepted the obligations under Article VIII, Sections 2, 3, and 4(a).
- Maintains an exchange system free of restrictions on payments and transfers for current international transactions.
- Maintains exchange restrictions for security reasons, based on UN Security Council Resolutions, notified to the Fund under Executive Board Decision No. 144-(52/51).

### Article IV Consultation
- Previous Article IV discussions: Doha in June 2007 and August 2007; Washington DC at the Annual Meetings in October 2007.
- Staff Report and supplement discussed by Executive Board on November 6, 2007.
- Qatar moved to a 12-month Article IV consultation cycle in 2007.
- Subsequent staff visit: May 2008.

### FSAP Participation, ROSCs, and AML/CFT
- FSAP missions: January and May 2007.
- AML/CFT assessment initiated by the Fund’s Legal Department during a mission in February 2007.
- A ROSC for FATF recommendations for AML and Special recommendations on CFT was prepared and circulated to the Board for information.

### IMF Technical Assistance (selected entries)
- STA: November/December 1994 Multisector Statistics Mission
- MAE: June 1995 Financial Sector Reform
- MAE: April 1997 Reform of the Qatar Central Bank’s legal framework
- MAE: September 1998/January 1999 Introducing government bonds and treasury bills
- 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

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### ANNEX II. QATAR: RELATIONS WITH THE WORLD BANK GROUP

### Strategic Cooperation Program (SCP)
- Program is recent and based on ad hoc government requests.
- Consultations are ongoing to develop a long-term program in:
  - Strategic planning
  - Pension system review
  - Small- and medium-enterprise support
  - Capital markets development
- Main World Bank counterpart: General Secretariat for Development Planning (GSDP); ongoing dialogue with Qatar Central Bank and Qatar Foundation.

### Ongoing Projects
- Labor Market Strategy (LMS) Implementation:
  - World Bank conducted a labor market survey and prepared an LMS including assessment of the labor force and review of laws, regulations, and institutional factors.
  - Results presented at a national symposium on April 9, 2006.
  - Bank is assisting government in implementing the LMS action plan.
- Moving Qatar Toward a Knowledge-Based Economy:
  - WBI conducted a KE Development study in 2007; results discussed at high-level workshops.
  - Bank supporting implementation via proposed Knowledge-Based Economy Campaign (KBEC).

### Completed Projects (selected)
- Public Transport Sector Study (FY03)
- Evaluation of Qatar’s Payments System (FY05)
- Macroeconomic modeling workshop (November 16–17, 2005)
- Workshop on PPPs in the GCC (May 16–17, 2006)
- Investment Climate Workshop (February 2004)

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### ANNEX III. QATAR: STATISTICAL ISSUES

### Data reporting and dissemination
- Data provision has shortcomings but is broadly adequate for surveillance.
- Qatar Statistics Authority (QSA) formed to spearhead statistical development.
- Improvements after Fund technical assistance:
  - Better classification of government sector in monetary statistics.
  - Regular publication of analytical accounts of banks.
  - Strengthened external current account data (trade and services) and improved estimation of workers’ remittances.
  - Wider range of national accounts aggregates published, including private consumption expenditure and national saving.
  - Detailed data on oil, gas, and medium- and long-term external debt provided to staff missions.
- Lags and gaps:
  - Long lags in reporting of price indices and other real sector statistics for IFS publication.
  - International trade details reported only sporadically for Direction of Trade Statistics.
  - Public finance data reported for 2008 GFS Yearbook but not for IFS.
  - 2005 BOP data provided to GDDS mission were not sufficiently detailed for BPM5 format inclusion in IFS.

### GDDS and data dissemination practices
- Qatar participant of GDDS since December 2005.
- 2007 GDDS mission assessed practices relative to SDDS requirements and identified milestones for SDDS graduation.
- Mission assisted in developing a National Summary Data Page (NSDP) and an Advance Release Calendar (ARC).
- Significant progress since 2005, but significant gaps remain.

### Sectoral data issues — Real sector statistics
- National accounts compiled broadly in line with 1993 SNA concepts and definitions.
- Key aggregates limited to annual GDP by activity and expenditure at current and constant prices, and quarterly GDP at current prices.
- Base year for constant price data: 2001.
- Accuracy of current price GDP undermined by lack of comprehensive source data.
- Constant price estimates do not follow sound deflation techniques due to lack of reliable price indices and volume indicators.
- Informal construction activities are estimated and included; no adjustments for other non-observed/illegal activities.

### Prices and employment
- CPI compiled quarterly since 2002; covers ~1100 items; prices collected from ~400 outlets.
- Frequency of price collection varies by item (e.g., vegetables, fruit, fish at least weekly; most items quarterly).
- Weights derived from HBS conducted during October 2000–September 2001.
- CPI usually completed about one month after quarter-end; elementary indices use geometric means.
- Employment statistics compiled and disseminated annually and with censuses; last censuses: 1997 and 2004; next expected in 2010.
- Annual employment data disseminated within six months of reference year; preliminary census-based employment data published within 9 months after census.

### Hydrocarbon sector
- Detailed oil and gas sector data provided to staff by Ministry of Energy and Petroleum and Qatar Petroleum (QP) during Article IV discussions.
- Authorities present medium-term plans for oil and gas, LNG, financing, and other QP-related industrial activities.

### Government finance statistics
- Budget data should follow GFSM 2001 guidelines with greater detail on expenditure and non-oil revenue categories; financing items should be consistent with depository corporations survey and BOP.
- Several largely commercial public sector entities should not be mixed with central government accounts.
- Authorities reported annual data for 2004–07 for publication in the Government Finance Statistics Yearbook.
- Monthly and quarterly data not reported for IFS publication.
- 2007 GDDS mission found Ministry of Finance (now Ministry of Economy and Finance) prioritizing GFSM recommendations to start disseminating complete annual government finance tables.
- A preliminary set of fiscal data in GFSM format provided to the 2008 Article IV mission.

### Monetary and financial statistics
- QCB and commercial bank data generally timely and high quality.
- QCB uses Standardized Reporting Forms to report monthly monetary data to STA for IFS and IFS Supplement.
- Monthly and quarterly data published in the Quarterly Statistics Bulletin.

### External sector statistics and balance of payments
- QCB has made progress in BOP compilation: expanded International Transactions Reporting System forms; new reporting for major oil and gas companies and affiliates.
- Serious omissions remain due to absence of timely and reliable source data:
  - No compilation for inward or outward direct investment.
  - No portfolio investment data for the nonbank sector.
  - Large errors and omissions; official statistics may underestimate total imports.
  - Source data for government external assets not provided to QCB; flows estimated for BOP but no stock information on government external assets.
- Inconsistency in coverage of flows and stocks of official reserves:
  - BOP flows include changes in QCB reserves and an estimate for change in government external assets.
  - Stock of official reserves published in IFS includes only QCB reserves.
- Progress in implementing technical assistance recommendations has been steady but slow.
- No official information published on amount or breakdown of external debt; detailed medium- and long-term external debt data provided to missions during Article IV consultations.
- Importance of improving flow of information on external debt and maturity profile noted.

### Table of Common Indicators Required for Surveillance (As of December 11, 2008) — selected entries
- Exchange Rates: Date of latest observation Nov. 2008; Date received Dec. 2008; Frequency of Data M; Frequency of Reporting M; Frequency of Publication M
- International Reserve Assets of the Monetary Authorities1: Date of latest observation Oct. 2008; Date received Nov. 2008; Frequency of Data M; Frequency of Reporting M; Frequency of Publication M
- Reserve/Base Money: Date of latest observation Oct. 2008; Date received Nov. 2008; Frequency M/M/M
- Broad Money: Date of latest observation Oct. 2008; Date received Nov. 2008; Frequency M/M/M
- Central Bank Balance Sheet: Oct. 2008 / Nov. 2008 / M / M / M
- Consolidated Balance Sheet of the Banking System: Oct. 2008 / Nov. 2008 / M / M / M
- Interest Rates2: Oct. 2008 / Nov. 2008 / M / - / Q
- Consumer Price Index: 2008 (Q3) / Dec. 2008 / Q / I / Q
- Revenue, Expenditure, Balance and Composition of Financing – General Government: ... / ... / NA / NA / NA
- Revenue, Expenditure, Balance and Composition of Financing – Central Government: 2007/08 / May 2008 / Q / I / I
- Stocks of Central Government and Central Government-Guaranteed Debt5: 2007 / June 2008 / A / I / I
- External Current Account Balance: 2007 / March 2008 / A / A / Q
- Exports and Imports of Goods and Services: 2007 / March 2008 / A / A / Q
- GDP/GNP: 2008 (Q2) / Sept. 2008 / Q / I / I
- Gross External Debt: 2007 / June 2008 / A / I / I
- International Investment Position7: Sept. 2007 / Oct. 2007 / A / I / NA

(Notes present in the table retained as in source: 1 includes reserve assets pledged or otherwise encumbered as well as net derivative positions; 2 both market-based and officially determined; 3 foreign, domestic bank, and domestic nonbank financing; 4 general government definition; 5 including currency and maturity composition; 6 frequency codes; 7 includes external gross financial asset and liability positions vis-a-vis nonresidents.)

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### Statement by the IMF Staff Representative on Qatar (January 21, 2009) — Key points

- Update availability: Information available since staff report circulated on January 5, 2009; does not change thrust of staff appraisal.
- Oil price baseline revision:
  - WEO baseline assumption revised downward in January 2009 to $50 a barrel for 2009 (from $54 a barrel assumed in the staff report).
  - OPEC announced a further cut in its crude oil production ceiling by 2.2 million barrels a day (mbd), effective January 1, 2009 (in addition to a cut of 1.5 mbd in September 2008).
  - Assuming Qatar fully implements its share of the cut and an unchanged expenditure profile, impacts compared with the baseline scenario in the report:
    - Real GDP growth would decline by 1 percentage point in 2009 to 28 percent.
    - Fiscal surplus would decline by 1 percentage point to 3.6 percent of GDP.
    - Current account surplus, at 9.4 of GDP, would be 3 percentage points of GDP lower than envisaged.
  - Over the medium-term, Qatar expected to maintain on average double-digit growth rates in non-oil real GDP and to record fiscal and current account surpluses, albeit at lower levels.
- Financial conditions:
  - Monetary data through November 2008 show comfortable liquidity in interbank market.
  - Deposits and lending by banking system continued to grow moderately.
  - Interbank rates moved back to below 2 percent—near pre-global crisis levels.
  - Stock market weak: market declined by more than 30 percent since September 10, 2008.
  - Central bank did not reduce policy rates when the U.S. Federal Reserve lowered rates in December 2008.
- Real estate market:
  - Potential for a sharp drop in real estate prices is of less concern because market characterized by excess demand causing rental inflation.
  - New units being completed; following introduction of the cap on rents, rent inflation is beginning to decline.

(Staff-report downside-risk assumptions cited in footnote: (i) an oil price of $45 a barrel in 2009; (ii) a larger cut in oil production than subsequently agreed by OPEC; and (iii) a 5 percent reduction in liquefied gas production (LNG) relative to the baseline.)

*Source: _cr0928 - ANNEX I. QATAR: FUND RELATIONS (As of November 30, 2008).*

### 5.      On December 30, 2008, the Heads of the Gulf Cooperation Council (GCC) approved

### _cr0928 - 5. On December 30, 2008, the Heads of the Gulf Cooperation Council (GCC) approved

### GCC monetary union and convergence criteria
- On December 30, 2008, the Heads of the Gulf Cooperation Council (GCC) approved a draft accord for the monetary union and a system governing the monetary council.
- The agreement must now be signed by the countries' heads of state for final approval, and is expected to come into force by the end of 2009.
- The GCC countries continue to meet all the convergence criteria, except for Qatar where the inflation rate is higher than the benchmark.
- Convergence criteria (as stated):
  - Fiscal deficits not to exceed 3 percent of GDP;
  - Public debt to GDP ratios not to exceed 60 percent;
  - Inflation rates not to exceed the GCC weighted average of inflation rates plus two percentage points;
  - Short-term interest rates not to exceed the average of the lowest three interest rates amongst the member countries plus two percentage points;
  - Foreign exchange reserves to cover at least 4 months of imports.
- Data for September 2008 show that the average inflation rate for the first three quarters of 2008 was about 15.5 percent.

### Qatar: 2008 macroeconomic performance (Article IV summary)
- Overall real gross domestic product (GDP) growth is estimated at 16 percent in 2008.
  - Growth driven by expansions in the production of oil, liquefied natural gas (LNG), and condensates, and a strong performance in manufacturing, construction, and financial services.
- Inflation remained high at 15 percent, reflecting high rent and food prices, large public outlays, and rapid expansion in private sector credit.
- Overall fiscal surplus: 12 percent of GDP in FY2007–08 (April-March).
  - Surplus reflected a large increase in oil revenue and a slowdown in expenditure relative to FY2006–07.
- External current account recorded a large surplus (about 37 percent of GDP) despite almost 50 percent growth in imports (mainly capital goods).
- Banking system: global turmoil has had a limited impact so far; recent assessments indicate potential stresses are manageable.
- Equity market: declined 30 percent, though underlying fundamentals remain strong.

### 2009 outlook and medium-term prospects
- Qatar is expected to perform at least as strong in 2009, driven by:
  - Rapid expansion in LNG production (and related industries);
  - Investments aimed at economic diversification.
- Inflation is projected to fall in 2009 due to:
  - Passthrough of declining international prices for food and raw materials;
  - Slower increase in domestic rents owing to a larger supply of low- and middle-income housing.
- Fiscal and external current accounts are projected to remain in surplus in 2009, despite lower oil prices.
- Main risks to the outlook:
  - A prolonged global financial crisis;
  - Persistently low oil prices;
  - A large decline in real estate prices;
  - Reduced availability of financing for projects;
  - An escalation in geopolitical tensions.

### Executive Board assessment and guidance
- Directors commended Qatari authorities for impressive macroeconomic performance and resilience to the global financial crisis.
- Key challenges identified:
  - Lower Qatar’s high rate of inflation;
  - Continue to shield the economy from the global financial crisis;
  - Ensure rapid credit growth does not undermine bank soundness;
  - Diversify the economy to reduce dependence on hydrocarbon production and exports.
- Views and recommendations:
  - Inflationary pressures should ease gradually because of lower food and raw material prices and an increased supply of residential and commercial properties.
  - Authorities should avoid the distortionary effects of price and rent controls; such measures should at best be temporary.
  - Support for moderating fiscal expansion and broadening the non-oil revenue base over the medium term.
  - Emphasis on building capacity in infrastructure and easing supply bottlenecks, while containing government current expenditure to reduce inflation.
  - If the global crisis persists or external financing difficulties arise, a temporary increase in government investment spending would be warranted to support demand without undermining inflation containment.
- Financial sector recommendations:
  - Continue close monitoring of financial sector developments;
  - Implement international standards against money laundering and terrorism financing;
  - Upgrade financial sector surveillance capabilities;
  - Continue stress testing of financial institutions and develop an early warning system to identify vulnerabilities.
  - Continue consultation between the central bank and government on issuance of government bonds to improve liquidity forecasting and debt management.
- Regulatory framework:
  - Welcome progress toward a unified regulator for financial services; implement gradually, preferably after international financial regulatory framework improvements are agreed.
  - In the interim, enhance coordination among existing regulators and continue improvements to the regulatory framework.
- Exchange rate and monetary policy:
  - Directors agreed the peg to the U.S. dollar continues to provide a credible anchor for monetary policy and maintain external stability.
  - Staff finding: the level of the Qatari riyal appears to be in line with economic fundamentals.
  - Directors welcomed the authorities’ commitment to the GCC Monetary Union and the decision to launch the Monetary Council by the end of 2009.
- Statistics:
  - Directors commended the establishment of the Qatar Statistics Authority and urged continued improvements in the quality of economic statistics, particularly national income, balance of payments, and the international investment position.

### Selected economic and financial indicators (2004–08)
- Production and Prices
  - Real GDP (in percent per annum): 2004 17.7; 2005 9.2; 2006 15.0; 2007 15.3; 2008 16.4
  - Hydrocarbon: 2004 12.5; 2005 6.0; 2006 10.7; 2007 16.2; 2008 18.2
  - Nonhydrocarbon GDP: 2004 24.6; 2005 13.1; 2006 19.9; 2007 25.7; 2008 30.6
  - Nominal GDP (in billion U.S. dollars): 2004 31.7; 2005 42.5; 2006 56.9; 2007 71.0; 2008 101.1
  - Consumer price index (period average): 2004 6.8; 2005 8.8; 2006 11.8; 2007 13.8; 2008 15.1
- Public Finance (In percent of GDP on fiscal year basis)
  - Total revenue: 2004 44.0; 2005 39.2; 2006 39.1; 2007 41.2; 2008 37.4
    - Hydrocarbon revenue: 2004 29.0; 2005 27.7; 2006 25.2; 2007 24.7; 2008 22.8
    - Other revenue: 2004 15.0; 2005 11.5; 2006 13.9; 2007 16.5; 2008 14.6
  - Total expenditure and net lending: 2004 28.8; 2005 30.3; 2006 30.5; 2007 29.6; 2008 25.4
    - Current expenditure, of which: 2004 22.6; 2005 19.5; 2006 22.6; 2007 17.8; 2008 14.7
      - Wages and salaries: 2004 6.3; 2005 4.0; 2006 5.9; 2007 5.2; 2008 5.0
    - Capital expenditure: 2004 6.3; 2005 10.7; 2006 7.9; 2007 11.8; 2008 10.7
  - Overall fiscal balance (deficit -): 2004 15.1; 2005 8.9; 2006 8.6; 2007 11.6; 2008 12.0
- Money (Annual change in percent)
  - Broad money: 2004 20.8; 2005 42.9; 2006 39.6; 2007 39.5; 2008 38.7
  - Claims on private sector: 2004 30.4; 2005 63.5; 2006 44.2; 2007 52.3; 2008 51.0
- External Sector (In million U.S. dollars, unless otherwise stated)
  - Exports of goods and services, of which: 2004 20,658; 2005 28,709; 2006 39,276; 2007 51,340; 2008 81,117
    - Crude oil and refined petroleum products: 2004 9,702; 2005 14,122; 2006 17,840; 2007 21,178; 2008 30,668
    - LNG and related exports: 2004 6,554; 2005 8,738; 2006 13,360; 2007 18,710; 2008 35,617
  - Imports of goods and services: 2004 -8,316; 2005 -12,575; 2006 -21,767; 2007 -27,128; 2008 -39,858
  - Current account: 2004 7,100; 2005 14,100; 2006 16,113; 2007 21,951; 2008 37,457
    - In percent of GDP: 2004 22.4; 2005 33.2; 2006 28.3; 2007 30.9; 2008 37.1
  - Central Bank reserves, net: 2004 3,358; 2005 4,555; 2006 5,410; 2007 9,546; 2008 10,757
    - In months of imports of goods and services (next 12 months): 2004 3.2; 2005 2.5; 2006 2.4; 2007 2.9; 2008 2.5
  - Exchange rates (riyals/U.S. dollars): 2004 3.64; 2005 3.64; 2006 3.64; 2007 3.64; 2008 3.64
  - Real effective exchange rate (percent change): 2004 -0; 2005 17.1; 2006 8.3; 2007 3.2; 2008 ...
- Sources noted in the original text: Data provided by the authorities; and IMF staff estimates and projections.
  - Staff estimates include crude oil, LNG, propane, butane, and condensate.
  - Fiscal year begins in April.
  - Months of imports refer to the next 12 months.

*Public Information Notice (PIN) No. 09/09, International Monetary Fund, January 28, 2009.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr0928.pdf_