IMF Executive Board Concludes 2016 Article IV Consultation with Qatar
IMF News, April 10, 2017
Source details
- Canonical URL
- IMF Executive Board Concludes 2016 Article IV Consultation with Qatar
Other formats
Bibliographic details
- Published: April 10, 2017
Overview
- IMF Executive Board concluded the Article IV consultation with Qatar on March 20, 2017.
- Qatar has been implementing an ambitious diversification strategy while strengthening its policy framework.
- Lower hydrocarbon prices have adversely impacted macroeconomic performance; growth slowed despite resilient non-hydrocarbon activity.
- Authorities adjusted policies in 2016 by cutting current expenditures, undertaking energy pricing and labor reforms, and placing stronger emphasis on raising non-hydrocarbon revenues.
Macroeconomic performance and projections
- Real GDP growth of 2.7 percent is estimated for 2016.
- CPI inflation averaged about 2.7 percent in 2016.
- Baseline projections:
- Real GDP growth projected at 3.4 percent for 2017, reflecting significant expansion in the non-hydrocarbon sector and added output from the new Barzan gas project.
- Growth expected to slow in the medium term as public investment growth tapers off and hydrocarbon output continues to slow.
- Risks to the baseline:
- Possibility of lower hydrocarbon prices compared to the baseline.
- Weaker expenditure efficiency and/or inflationary pressures from the large public investment program.
Fiscal and external balances
- Fiscal and external balances deteriorated from large surpluses to deficits due to sustained lower energy prices.
- Further subsidy cuts, a moderate recovery in global commodity prices, and the introduction of a VAT are expected to improve the fiscal and external balances gradually over the near to medium term.
- Directors recommended gradual fiscal consolidation over the medium term to ensure intergenerational equity of exhaustible hydrocarbon wealth.
- Policy measures supported by Directors:
- Subsidy reforms.
- Containment of public-service benefits.
- Lower spending on goods and services.
- Introduction of a VAT and excise taxes.
- Explore additional revenue measures, including broadening the base of existing taxes, particularly for the corporate income tax, over the medium term.
Financial sector and monetary policy
- Banking system liquidity has tightened and credit to the private sector has moderated, but banks remain sound and well capitalized.
- Directors noted banks could face risks from sustained low hydrocarbon prices or increasing interest rates.
- Recommendations and welcomed actions:
- Develop a more active liquidity forecasting framework (given the impact of government financing on banks).
- Continue implementation of Basel III and macro-prudential regulations.
- Elaborate and implement the new Strategic Plan for Financial Regulation and the development of an early warning system.
- Enhance the framework for anti-money laundering and combating the financing of terrorism.
- Directors concurred that Qatar’s fixed exchange rate regime remains appropriate and noted further strengthening of the monetary policy framework and deepening domestic financial markets, particularly the domestic debt market, would be helpful.
Structural reforms, diversification, and statistics
- Directors supported authorities’ efforts to enhance economic diversification and promote private sector development.
- Encouraged additional measures to further improve the business environment.
- Noted that labor market and education reforms will help raise productivity, increase potential output, and support inclusive growth.
- Commended fiscal-structural reforms:
- Progress in preparing a medium-term fiscal strategy.
- Introduction of a new tender law and public finance law.
- Encouraged further efforts to enhance monitoring of public expenditures to improve efficiency and management of investment spending and to improve transparency.
- Directors welcomed improvements in economic statistics and underscored that further efforts are needed to address remaining gaps.
Key statistics (2013–2018; as presented)
- Real GDP (annual change in percent):
- 2013: 4.4
- 2014: 4.0
- 2015: 3.6
- 2016: 2.7
- 2017 (Proj.): 3.4
- 2018 (Proj.): 2.8
- Hydrocarbon (annual change in percent):
- 2013: 0.1
- 2014: -0.6
- 2015: -0.5
- 2016: -0.9
- 2017 (Proj.): 1.1
- 2018 (Proj.): 0.2
- Nonhydrocarbon (annual change in percent):
- 2013: 10.4
- 2014: 9.8
- 2015: 8.2
- 2016: 6.5
- 2017 (Proj.): 5.7
- 2018 (Proj.): 5.3
- CPI inflation (average):
- 2013: 3.1
- 2014: 1.8
- 2015: 2.6
- 2016: (about) 2.7
- Public finance (percent of GDP):
- Total revenue:
- 2013: 47.6
- 2014: 45.7
- 2015: 42.7
- 2016: 25.3
- 2017 (Proj.): 24.5
- 2018 (Proj.): 25.0
- Expenditure:
- 2013: 28.3
- 2014: 33.4
- 2015: 41.5
- 2016: 34.4
- 2017 (Proj.): 32.3
- 2018 (Proj.): 29.7
- Current:
- 2013: 19.4
- 2014: 28.0
- 2015: 20.0
- 2016: 17.9
- 2017 (Proj.): 16.9
- 2018 (Proj.): 16.9
- Capital:
- 2013: 8.9
- 2014: 8.4
- 2015: 13.6
- 2016: 14.3
- 2017 (Proj.): 14.4
- 2018 (Proj.): 12.9
- Central government fiscal balance:
- 2013: 19.3
- 2014: 12.3
- 2015: 1.2
- 2016: -9.0
- 2017 (Proj.): -7.7
- 2018 (Proj.): -4.8
- Money and credit:
- Broad money:
- 2013: 19.6
- 2014: 10.6
- 2015: -2.0
- 2016: 5.0
- Credit to private sector:
- 2013: 13.5
- 2014: 20.3
- 2015: 19.7
- 2016: 10.8
- External sector (billions of U.S. dollars unless otherwise noted):
- Exports:
- 2013: 133.3
- 2014: 126.7
- 2015: 77.3
- 2016: 58.8
- 2017 (Proj.): 69.9
- 2018 (Proj.): 73.8
- Imports:
- 2013: -31.5
- 2014: -31.1
- 2015: -28.5
- 2016: -29.2
- 2017 (Proj.): -34.2
- 2018 (Proj.): -35.8
- Current account balance (billions USD):
- 2013: 60.5
- 2014: 49.4
- 2015: 13.8
- 2016: -3.5
- Current account balance (in percent GDP):
- 2013: 30.4
- 2014: 24.0
- 2015: -2.2
- 2016: 0.7
- 2017 (Proj.): 0.6
- External debt (percent GDP):
- 2013: 81.4
- 2014: 80.7
- 2015: 110.6
- 2016: 142.1
- 2017 (Proj.): 139.0
- 2018 (Proj.): 131.5
- Central bank reserves 4/ (billions USD):
- 2013: 42.2
- 2014: 43.1
- 2015: 37.2
- 2016: 30.1
- 2017 (Proj.): 35.6
- 2018 (Proj.): 36.0
- Central bank reserves (in months of imports):
- 2013: 7.8
- 2014: 8.6
- 2015: 7.1
- 2016: 5.2
- Real effective exchange rate (percentage change):
- 2013: 2.5
- 2014: 2.2
- 2015: 11.2
Source: IMF Communications Department, Press Release No. 17/125, April 10, 2017.