{
  "title": "IMF Executive Board Concludes 2019 Article IV Consultation with Qatar",
  "publication": "IMF News, June 3, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/06/03/pr19192-qatar-imf-executive-board-concludes-2019-article-iv-consultation-with-qatar",
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  "summary": "Real GDP growth is estimated at 2.2 percent in 2018, up from 1.6 percent in 2017.",
  "publishDate": "2019-06-03",
  "sections": [
    {
      "heading": "Economic performance and 2018 outcomes",
      "content": "- Real GDP growth is estimated at 2.2 percent in 2018, up from 1.6 percent in 2017.\n- Headline inflation remained low.\n- The central government’s fiscal position switched to a surplus of 2.3 percent of GDP in 2018 from a sizable deficit in 2017.\n- The current account is estimated to have reached a surplus of 9.3 percent of GDP in 2018, largely reflecting higher average oil prices.\n- Reserves reached US$31 billion (5½ months of imports) at end-December 2018.\n- Qatar issued US$12 billion in international bonds, which was more than four times oversubscribed, with lower spreads than in previous issues.\n- Recovery in non-resident deposits and foreign bank funding helped banks increase private sector credit.\n- After an 82 percent increase during 2012–16, real estate prices fell by 15 percent during 2017–18 (QCB real estate price index)."
    },
    {
      "heading": "Macro-financial outlook and risks",
      "content": "- Overall GDP growth is projected to reach 2.6 percent in 2019 from 2.2 percent in 2018.\n- Projected non-hydrocarbon growth for 2019 reflects lingering multiplier effects of increased capital expenditures, gradual fiscal consolidation, ample liquidity, and increased private sector activity.\n- Medium-term growth will be supported by increased gas production from the Barzan field and a planned increase in LNG production capacity by 40 percent.\n- Inflation is projected to peak at 3.7 percent in 2020 with the introduction of a VAT, but converge to 2 percent in the medium term.\n- A current account surplus of about 4.6 percent of GDP is envisaged for 2019.\n- Over the medium term, the current account would be in modest surplus.\n- Main downside risks:\n  - Lower-than-projected hydrocarbon prices (would deteriorate external and fiscal positions and raise public debt).\n  - Rising trade and geopolitical tensions (could undermine investor confidence and weaken fiscal and external positions).\n- Qatar is considered well placed to contain adverse macro-financial implications of downside risks due to substantial buffers and prudent policies."
    },
    {
      "heading": "Fiscal policy assessment and recommendations",
      "content": "- Fiscal consolidation has shifted the fiscal balance to surplus; gradual consolidation is appropriate given substantial fiscal space.\n- In 2019, expenditure restraint and lagged revenue impact of higher oil prices would result in further improvement of fiscal position to about 3 percent (from 2.3 percent in 2018).\n- Over the medium term, the fiscal position would be in moderate surplus due to broadly stable hydrocarbon prices and sustained expenditure control.\n- Policy recommendations:\n  - Enhance non-hydrocarbon revenues, including continuing introduction of a VAT, to build a broad-based tax system.\n  - Contain growth of the wage bill and put public investment on a downward path.\n  - Implement education and labor market measures to complement public-sector employment reform.\n  - Accelerate strategy to further reduce utility subsidies, combined with strengthening social protection.\n  - Strengthen fiscal policy frameworks to avert procyclicality, mitigate risks, and ensure intergenerational equity.\n  - Use fiscal indicators that emphasize intergenerational equity and indicators to better manage oil price volatility.\n  - Improve coordination among fiscal authorities, QCB and QIA; complement with a medium-term budget framework and accelerate transition to a performance-based medium-term expenditure framework.\n  - Publish comprehensive budget information, including fiscal risks, budget execution data, and the composition of QIA’s assets, to support transparency."
    },
    {
      "heading": "Financial sector and banking",
      "content": "- Banking sector soundness indicators (end-September 2018):\n  - CAR of 16 percent.\n  - ROA of 1.6 percent.\n  - Non-performing loans ratio of 1.7 percent.\n  - Provisioning ratio of 83 percent.\n  - Liquid-asset-to-total-asset ratio of 29.7 percent.\n- System-wide loan-to-deposit (LTD) ratio of 103 percent, higher than the CB’s guidance of 100 percent (credit growth outpaced deposits).\n- Recommendations for the financial sector:\n  - Continue close monitoring of banking sector assets given softening real estate prices.\n  - QCB should consider introducing additional indicators such as vacancy rates to assess real estate developments.\n  - Emphasize risk-based supervision to detect vulnerabilities earlier.\n  - Enforce the loan-to-deposit ratio to encourage banks to reduce leverage.\n  - Strengthen modalities for exchange of information between fiscal and monetary authorities to avert sharp swings in liquidity.\n  - Strengthen financial supervision and the regulatory framework to manage risks from financial innovation and protect consumers."
    },
    {
      "heading": "Structural reforms and diversification",
      "content": "- Structural reform priorities to support private sector-led and inclusive growth:\n  - Continue reforms on the business environment, special economic zones (SEZs), labor law, increased foreign ownership limits, and privatization.\n  - SEZs can be helpful in the short term but should not replace economy-wide structural reforms.\n  - Use domestic and export-market competition as benchmarks to hold government-supported beneficiaries accountable.\n  - Improve contract enforcement, strengthen competition via insolvency reform, and ensure equal remuneration and gender equality to support inclusive growth."
    },
    {
      "heading": "Selected economic and financial indicators, 2015–2020 (Prel. = Preliminary; Proj. = Projection)",
      "content": "- Real GDP (2013 prices)\n  - 2015: 3.7\n  - 2016: 2.1\n  - 2017: 1.6\n  - 2018: 2.2\n  - 2019: 2.6\n  - 2020: 3.2\n- Hydrocarbon\n  - 2015: -0.6\n  - 2016: -0.9\n  - 2017: -0.7\n  - 2018: -1.1\n  - 2019: 0.4\n  - 2020: 1.8\n- Nonhydrocarbon\n  - 2015: 8.5\n  - 2016: 5.3\n  - 2017: 3.8\n  - 2018: 4.6\n  - 2019: 4.3\n- CPI inflation (average)\n  - 2015: 2.7\n  - 2016: 0.2\n  - 2017: 0.1\n- Public finance (percent of GDP)\n  - Total revenue\n    - 2015: 43.6\n    - 2016: 30.9\n    - 2017: 26.9\n    - 2018: 31.7\n    - 2019: 32.8\n    - 2020: (blank in source)\n  - Expenditure\n    - 2015: 42.3\n    - 2016: 40.1\n    - 2017: 33.5\n    - 2018: 29.4\n    - 2019: 29.8\n    - 2020: 28.3\n  - Current\n    - 2015: 28.5\n    - 2016: 21.5\n    - 2017: 18.6\n    - 2018: 15.5\n    - 2019: 17.1\n    - 2020: 17.2\n  - Capital\n    - 2015: 13.8\n    - 2016: 14.8\n    - 2017: 13.9\n    - 2018: 12.6\n    - 2019: 11.2\n- Central government fiscal balance\n  - 2015: 1.3\n  - 2016: -9.2\n  - 2017: -6.6\n  - 2018: 2.3\n  - 2019: 3.0\n  - 2020: 3.4\n- Money and credit\n  - Broad money\n    - 2015: -4.6\n    - 2016: 21.3\n    - 2017: -6.5\n    - 2018: 7.9\n  - Credit to private sector\n    - 2015: 19.7\n    - 2016: 6.5\n    - 2017: 6.4\n    - 2018: 13.0\n    - 2019: 4.8\n    - 2020: 9.0\n- External sector\n  - Exports\n    - 2015: 77.3\n    - 2016: 57.3\n    - 2017: 67.5\n    - 2018: 84.5\n    - 2019: 80.2\n    - 2020: 80.4\n  - Imports\n    - 2015: -28.5\n    - 2016: -31.9\n    - 2017: -30.8\n    - 2018: -33.2\n    - 2019: -33.9\n    - 2020: -34.6\n  - Current account balance (in percent GDP)\n    - 2015: -5.5\n    - 2016: 9.3\n    - 2017: 4.1\n    - 2018: (blank in source)\n- External debt (percent GDP)\n  - 2015: 88.4\n  - 2016: 127.2\n  - 2017: 99.6\n  - 2018: 101.1\n  - 2019: 106.7\n  - 2020: 98.3\n- Central bank reserves 2/\n  - 2015: 37.2\n  - 2016: 14.9\n  - 2017: 30.5\n  - 2018: 44.3\n  - 2019: 41.2\n  - in months of imports\n    - 2015: 7.0\n    - 2016: 6.1\n    - 2017: 5.5\n    - 2018: 7.7\n    - 2019: 6.9\n- Exchange rate (Riyals/US$)\n  - 2015: 3.6\n- Real effective exchange rate (percentage change)\n  - 2015: 11.0\n  - 2016: -3.7\n\nIMF Executive Board Concludes 2019 Article IV Consultation with Qatar (Press Release No. 19/192), June 3, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\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/2019/06/03/pr19192-qatar-imf-executive-board-concludes-2019-article-iv-consultation-with-qatar"
    }
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    "Published: June 3, 2019",
    "Real GDP growth is estimated at 2.2 percent in 2018, up from 1.6 percent in 2017.",
    "Headline inflation remained low.",
    "The central government’s fiscal position switched to a surplus of 2.3 percent of GDP in 2018 from a sizable deficit in 2017.",
    "The current account is estimated to have reached a surplus of 9.3 percent of GDP in 2018, largely reflecting higher average oil prices.",
    "Reserves reached US$31 billion (5½ months of imports) at end-December 2018.",
    "Qatar issued US$12 billion in international bonds, which was more than four times oversubscribed, with lower spreads than in previous issues.",
    "Recovery in non-resident deposits and foreign bank funding helped banks increase private sector credit.",
    "After an 82 percent increase during 2012–16, real estate prices fell by 15 percent during 2017–18 (QCB real estate price index).",
    "Overall GDP growth is projected to reach 2.6 percent in 2019 from 2.2 percent in 2018.",
    "Projected non-hydrocarbon growth for 2019 reflects lingering multiplier effects of increased capital expenditures, gradual fiscal consolidation, ample liquidity, and increased private sector activity.",
    "Medium-term growth will be supported by increased gas production from the Barzan field and a planned increase in LNG production capacity by 40 percent.",
    "Inflation is projected to peak at 3.7 percent in 2020 with the introduction of a VAT, but converge to 2 percent in the medium term.",
    "A current account surplus of about 4.6 percent of GDP is envisaged for 2019.",
    "Over the medium term, the current account would be in modest surplus.",
    "Main downside risks:",
    "Qatar is considered well placed to contain adverse macro-financial implications of downside risks due to substantial buffers and prudent policies.",
    "Fiscal consolidation has shifted the fiscal balance to surplus; gradual consolidation is appropriate given substantial fiscal space.",
    "In 2019, expenditure restraint and lagged revenue impact of higher oil prices would result in further improvement of fiscal position to about 3 percent (from 2.3 percent in 2018).",
    "Over the medium term, the fiscal position would be in moderate surplus due to broadly stable hydrocarbon prices and sustained expenditure control.",
    "Policy recommendations:",
    "Banking sector soundness indicators (end-September 2018):",
    "System-wide loan-to-deposit (LTD) ratio of 103 percent, higher than the CB’s guidance of 100 percent (credit growth outpaced deposits).",
    "Recommendations for the financial sector:",
    "Structural reform priorities to support private sector-led and inclusive growth:",
    "Real GDP (2013 prices)",
    "Hydrocarbon",
    "Nonhydrocarbon",
    "CPI inflation (average)",
    "Public finance (percent of GDP)",
    "Central government fiscal balance",
    "Money and credit",
    "External sector",
    "External debt (percent GDP)",
    "Central bank reserves 2/",
    "Exchange rate (Riyals/US$)",
    "Real effective exchange rate (percentage change)",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[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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