IMF Staff Completes Visit to Qatar

IMF News, November 14, 2018

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An IMF team led by Mohammed El-Qorchi visited Doha from October 29-November 4 to assess recent economic developments and outlook since the completion of the 2018 Article IV consultation in May.
Significant fiscal and external buffers enabled Qatar to successfully absorb the adverse shocks from the 2014-16 decline in oil prices and the diplomatic rift.
Near- to medium-term outlook remains favorable in the context of relatively higher hydrocarbon prices, prudent fiscal policy, healthy financial system and accelerated structural reforms.
The mission will not result in a Board discussion. End-of-Mission press releases convey preliminary findings; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

Non-hydrocarbon output grew by about 6 percent during the first half of 2018.
Hydrocarbon output fell by about 1.6 percent during the same period.
Overall real GDP growth of 2.3 percent for the first half of 2018.
Real GDP growth of 2.4 percent is projected for 2018 as a whole, up from 1.6 percent in 2017.
Headline inflation remains subdued.
Monetary and financial conditions have improved significantly, with banks attracting non-resident flows and reducing reliance on financial support from fiscal and monetary authorities.
Excises would likely be put in place in 2019.

Overall real GDP growth projected at 3.1 percent in 2019, with still robust non-hydrocarbon growth and recovery in oil and gas production.
Over 2020-2023, real GDP growth of about 2.7 percent annually is projected.
Growth drivers: significant public infrastructure spending, expansion of liquid natural gas production, and the hosting of 2022 World Cup.
Fiscal and external balances are expected to remain in surplus during 2019-2023, supporting additional foreign exchange accumulation by the central bank.
The authorities plan to introduce a VAT, with an implementation target date towards the end of 2019 or early 2020; this is expected to slightly lift prices upon implementation.
The outlook is subject to downside risks, including: escalated global trade tensions, tightened monetary policy stance in the U.S., and increased volatility in global financial markets.

Qatar plans to pursue prudent fiscal policy despite higher oil prices, taking into consideration associated impact on the economy.
The 2019 budget is expected to contain overall expenditure growth, with continued emphasis on allocation to critical sectors (health and education).
The current account surplus is projected at about 7 percent of GDP in 2019.
QCB’s foreign exchange reserves are expected to increase further, reaching about US$36 billion in 2019.

Qatar’s banking sector remains sound.
Foreign liabilities withdrawn in the immediate aftermath of the diplomatic rift have been partially replaced.
Greater attention is being paid to the diversity of funding sources and deposit maturity structure.
Official deposits placed with banks after the rift have been reduced.
As higher oil prices and returning foreign liabilities have enhanced banking liquidity, credit to the private sector has been growing at a healthy pace.
QCB continues to closely monitor developments in the real estate sector in view of the softening in prices and potential implications for the banking sector.

Progress with structural reforms continues.
The second national development strategy highlights the need for economic diversification.
The strategy identifies priority sectors including manufacturing, financial services, and tourism, while emphasizing competitiveness and the role of the private sector.
The Private Sector Committee is promoting public-private partnership in areas such as food security, manufacturing, health, and education.

IMF Press Release No. 18/422, November 14, 2018.