## IMF Staff Completes Visit to Qatar

_IMF News, November 14, 2018_

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## Bibliographic details
- Published: November 14, 2018

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### Mission summary and key findings
- 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.

### Recent economic performance and short-term outlook
- 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.

### Medium-term projections (2019–2023)
- 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.

### Fiscal and external positions
- 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.

### Financial sector and banking system
- 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.

### Structural reforms and diversification
- 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.*

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## References

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_Source: https://www.imf.org/en/news/articles/2018/11/14/pr18422-imf-staff-completes-visit-to-qatar_