{
  "title": "IMF Executive Board Concludes 2018 Article IV Consultation with Qatar",
  "publication": "IMF News, May 30, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/05/30/pr18202-qatar-2018-article-iv-consultation",
  "canonical": "https://www.imf.org/en/news/articles/2018/05/30/pr18202-qatar-2018-article-iv-consultation",
  "overlayPath": "/en/news/articles/2018/05/30/pr18202-qatar-2018-article-iv-consultation/index.md",
  "summary": "Non-hydrocarbon real GDP growth is estimated to have moderated to about 4 percent in 2017 due to on-going fiscal consolidation and the effect of the diplomatic rift.",
  "publishDate": "2018-05-30",
  "sections": [
    {
      "heading": "Growth performance and outlook",
      "content": "- Non-hydrocarbon real GDP growth is estimated to have moderated to about 4 percent in 2017 due to on-going fiscal consolidation and the effect of the diplomatic rift.\n- Overall real GDP growth was 2.1 percent in 2017.\n- A self-imposed moratorium on new projects in the North Oil Field until the second quarter of 2017 and the OPEC+ deal restrained hydrocarbon output growth.\n- Headline inflation remained subdued, primarily due to lower rental prices; the real estate price index fell by 11 percent in 2017 (year-on-year basis) following cumulative increase of 53 percent during 2013–16.\n- Near-term outlook: overall GDP growth of 2.6 percent projected for 2018.\n- Inflation projection: expected to peak at 3.9 percent in 2018—as the impact of the value-added tax being introduced during the second half of 2018 would mostly be felt in that year—before easing to 2.2 percent in the medium term.\n- Risks: lower-than-envisaged oil prices, tighter global conditions and an escalation of the diplomatic rift."
    },
    {
      "heading": "Fiscal position and public finance",
      "content": "- Fiscal deficit estimated to have narrowed to about 6 percent of GDP in 2017 from 9.2 percent in 2016.\n- The deficit has been financed by a combination of domestic and external financing.\n- Public debt estimated at 54 percent of GDP as at end-2017 and assessed as sustainable.\n- Current account improving in the context of increased oil and gas.\n- From the Selected Economic and Financial Indicators table (2014–19):\n  - Total revenue: 45.7 (2014); 42.8 (2015); 30.7 (2016); 26.3 (2017); 28.9 (2018); 31.5 (2019).\n  - Expenditure: 33.4 (2014); 41.5 (2015); 39.9 (2016); 32.4 (2017); 30.4 (2018); 28.2 (2019).\n  - Central government fiscal balance: 12.3 (2014); 1.3 (2015); -9.3 (2016); -6.0 (2017); -1.4 (2018).\n  - Capital expenditure: 8.4 (2014); 13.6 (2015); 18.5 (2016); 13.8 (2017); 14.6 (2018); 12.4 (2019)."
    },
    {
      "heading": "Banking sector and financial stability",
      "content": "- Banking sector assessed as healthy overall with high asset quality and strong capitalization.\n- As at end-September 2017:\n  - Capital adequacy ratio of 15.4 percent.\n  - Return on assets of 1.6 percent.\n  - Non‑performing loans ratio of 1.5 percent.\n  - Provisioning ratio of non‑performing loans of 85 percent.\n  - Liquid asset to total asset ratio of 27.3 percent.\n- Noted concerns:\n  - Real estate price softening and loan concentration in the real estate sector warrant vigilance.\n  - Bank reserves have declined since 2015.\n  - FinTech will likely create new challenges and opportunities requiring additional regulatory capacity."
    },
    {
      "heading": "Executive Board Assessment and policy recommendations",
      "content": "- Directors noted considerable buffers and sound macroeconomic policies that helped absorb shocks from lower hydrocarbon prices and the diplomatic rift.\n- Fiscal policy recommendations and observations:\n  - Qatar has ample fiscal space to continue with gradual fiscal consolidation to ensure sufficient saving of the hydrocarbon wealth for future generations.\n  - Support for enhancing non‑oil revenue, including putting in place a VAT and excises.\n  - Strengthened expenditure control, emphasis on further public‑service reform and accelerated reform of public utility companies to improve economic efficiency.\n  - Importance of wage reform to reduce the public to private wage gap.\n  - Recommendation to enhance the medium‑term fiscal framework with a clear medium‑term objective to guide fiscal efforts.\n  - Improvement in reporting of fiscal accounts to strengthen accountability, transparency, and policy effectiveness.\n- Financial sector recommendations and observations:\n  - Support for efforts to strengthen macro prudential regulation and consolidated supervision.\n  - Further progress in improving liquidity monitoring and forecasting to anticipate and plan for potential system‑wide pressures.\n  - Encouragement to continue to strengthen the AML/CFT framework and address identified gaps.\n- Exchange rate and diversification:\n  - Directors concurred that the currency peg to the U.S. dollar continues to serve Qatar well as a monetary anchor; exchange rate regime should be reviewed periodically.\n  - Support for efforts to enhance economic diversification and promote private sector development, including labor law reform, privatization, special economic zones, and increased foreign ownership limits.\n  - Caution against import‑substitution strategies and special tax incentives or labor policies that might result in market distortions.\n  - Additional measures to improve the business environment—contract enforcement and reform of the insolvency mechanism—will boost private sector growth prospects.\n  - Laws promoting equal remuneration and discouraging gender‑based discrimination would contribute to inclusive growth.\n  - Encouragement to continue to enhance macroeconomic statistics."
    },
    {
      "heading": "Key statistics (from Selected Economic and Financial Indicators, 2014–19)",
      "content": "- Real GDP (2013 prices): 4.0 (2014); 3.6 (2015); 2.2 (2016); 2.1 (2017); 2.6 (2018); 2.7 (2019).\n- Hydrocarbon production: -0.6 (2014); -0.5 (2015); -1.0 (2016); 0.2 (2017); 1.0 (2018); 1.2 (2019).\n- Nonhydrocarbon production: 9.8 (2014); 8.2 (2015); 5.6 (2016); 4.1 (2017).\n- CPI inflation (average): 3.4 (2014); 1.8 (2015); 0.4 (2016); 3.9 (2017); 3.5 (2019).\n- Broad money growth: 10.6 (2014); -4.6 (2015); 21.3 (2016); 5.5 (2017); 6.1 (2018).\n- Credit to private sector: 20.3 (2014); 19.7 (2015); 6.5 (2016); 6.4 (2017); 6.6 (2018).\n- Exports (percent change): 126.7 (2014); 77.3 (2015); 57.3 (2016); 65.1 (2017); 75.9 (2018); 76.2 (2019).\n- Imports (percent change): -31.1 (2014); -28.5 (2015); -31.9 (2016); -34.1 (2017); -37.8 (2018); -35.7 (2019).\n- Current account balance (in percent GDP): 24.0 (2014); -5.5 (2015); 2.5 (2016).\n- External debt (percent GDP): 48.6 (2014); 73.8 (2015); 110.9 (2016); 88.0 (2017); 86.6 (2018); 82.7 (2019).\n- Central bank reserves 2/ (in months of imports): 43.1 (2014); 37.2 (2015); 31.7 (2016); 14.9 (2017); 19.6 (2018); 23.2 (2019).\n- Real effective exchange rate (percentage change): 11.2 (2014).\n\nIMF Press Release No. 18/202 — May 30, 2018\n\n---\n\n\n References\n\n- Qatar and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2018/05/30/pr18202-qatar-2018-article-iv-consultation"
    }
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    "Published: May 30, 2018",
    "Non-hydrocarbon real GDP growth is estimated to have moderated to about 4 percent in 2017 due to on-going fiscal consolidation and the effect of the diplomatic rift.",
    "Overall real GDP growth was 2.1 percent in 2017.",
    "A self-imposed moratorium on new projects in the North Oil Field until the second quarter of 2017 and the OPEC+ deal restrained hydrocarbon output growth.",
    "Headline inflation remained subdued, primarily due to lower rental prices; the real estate price index fell by 11 percent in 2017 (year-on-year basis) following cumulative increase of 53 percent during 2013–16.",
    "Near-term outlook: overall GDP growth of 2.6 percent projected for 2018.",
    "Inflation projection: expected to peak at 3.9 percent in 2018—as the impact of the value-added tax being introduced during the second half of 2018 would mostly be felt in that year—before easing to 2.2 percent in the medium term.",
    "Risks: lower-than-envisaged oil prices, tighter global conditions and an escalation of the diplomatic rift.",
    "Fiscal deficit estimated to have narrowed to about 6 percent of GDP in 2017 from 9.2 percent in 2016.",
    "The deficit has been financed by a combination of domestic and external financing.",
    "Public debt estimated at 54 percent of GDP as at end-2017 and assessed as sustainable.",
    "Current account improving in the context of increased oil and gas.",
    "From the Selected Economic and Financial Indicators table (2014–19):",
    "Banking sector assessed as healthy overall with high asset quality and strong capitalization.",
    "As at end-September 2017:",
    "Noted concerns:",
    "Directors noted considerable buffers and sound macroeconomic policies that helped absorb shocks from lower hydrocarbon prices and the diplomatic rift.",
    "Fiscal policy recommendations and observations:",
    "Financial sector recommendations and observations:",
    "Exchange rate and diversification:",
    "Real GDP (2013 prices): 4.0 (2014); 3.6 (2015); 2.2 (2016); 2.1 (2017); 2.6 (2018); 2.7 (2019).",
    "Hydrocarbon production: -0.6 (2014); -0.5 (2015); -1.0 (2016); 0.2 (2017); 1.0 (2018); 1.2 (2019).",
    "Nonhydrocarbon production: 9.8 (2014); 8.2 (2015); 5.6 (2016); 4.1 (2017).",
    "CPI inflation (average): 3.4 (2014); 1.8 (2015); 0.4 (2016); 3.9 (2017); 3.5 (2019).",
    "Broad money growth: 10.6 (2014); -4.6 (2015); 21.3 (2016); 5.5 (2017); 6.1 (2018).",
    "Credit to private sector: 20.3 (2014); 19.7 (2015); 6.5 (2016); 6.4 (2017); 6.6 (2018).",
    "Exports (percent change): 126.7 (2014); 77.3 (2015); 57.3 (2016); 65.1 (2017); 75.9 (2018); 76.2 (2019).",
    "Imports (percent change): -31.1 (2014); -28.5 (2015); -31.9 (2016); -34.1 (2017); -37.8 (2018); -35.7 (2019).",
    "Current account balance (in percent GDP): 24.0 (2014); -5.5 (2015); 2.5 (2016).",
    "External debt (percent GDP): 48.6 (2014); 73.8 (2015); 110.9 (2016); 88.0 (2017); 86.6 (2018); 82.7 (2019).",
    "Central bank reserves 2/ (in months of imports): 43.1 (2014); 37.2 (2015); 31.7 (2016); 14.9 (2017); 19.6 (2018); 23.2 (2019).",
    "Real effective exchange rate (percentage change): 11.2 (2014).",
    "[Qatar and the IMF](http://www.imf.org/external/country/QAT/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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