IMF Staff Concludes Staff Visit with Qatar

IMF News, May 18, 2023

Source details

An IMF team, led by Ms. Ran Bi, visited Doha during May 2–11, 2023 to gather facts on recent economic and financial sector developments, and the authorities’ policy actions and plans.
End-of-Mission press releases convey preliminary findings after a visit; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
The team met with Minister of Finance H.E. Ali bin Ahmed al Kuwari, Governor of the Qatar Central Bank H.E. Sheikh Bandar Bin Mohammed Bin Saoud Al-Thani, other senior government officials, and private sector representatives.
The team looked forward to continuing the dialogue ahead of the 2023 Article IV Consultation.

2022: Very strong growth registered, boosted by hosting the 2022 FIFA World Cup.
Near-term outlook: Economy is expected to normalize in the near term while remaining robust.
Real GDP growth projections:
- Expected at 2–2½ percent in 2023–24 on robust domestic demand and the ongoing LNG expansion.
- Medium-term growth likely to rise to around 4–4½ percent after the North Field expansion starts boosting LNG production.
Inflation: Moderating gradually to around 3 percent.
Accounts: Fiscal and external current accounts are projected be in surpluses throughout the medium term.
External environment and opportunities:
- Russian war in Ukraine highlighted risks and the role of natural gas in energy security, opening opportunities for Qatar.
- Banking sector turmoil originating from the U.S. had only a limited and temporary impact on the domestic financial system.

Fiscal discipline and outcomes:
- Fiscal surplus rose to around 10 percent of GDP in 2022, from close to zero in 2021.
- Central government debt declined by 16 percentage points to around 42 percent of GDP during the same period.
2023 budget: Continued discipline and sustaining domestic demand, with a broadly unchanged wage bill and cuts in public investment from 2022 outturns.
Medium-term budget: The upcoming medium-term budget for 2023–25 will be developed following the release of the 3rd National Development Strategy to balance aspiration for transformation and fiscal discipline.
Hydrocarbon windfalls: Most hydrocarbon windfalls in 2022 were saved; buoyant export revenue and public spending aid fiscal and external surpluses.

Monetary policy stance:
- The QCB has maintained price and financial stability.
- Monetary policy has been tightened broadly following the U.S. Federal Reserve, consistent with the currency peg to the U.S. dollar.
- Monetary policy transmission has strengthened through more effective liquidity management.
Banking sector soundness:
- Banks remain well-capitalized, liquid and profitable.
- Non-performing loans (NPLs) ratio has edged up amid monetary policy tightening; relatively high provisioning for NPLs mitigates the risk.
- Banks’ reliance on non-resident deposits has progressively fallen by more than one-third (nearly US$30 billion) since their peak registered in late-2021.
- Completion of World Cup-related projects and hydrocarbon windfalls have reduced credit demand from the public sector and provided additional liquidity to banks, reducing their funding needs.
Macroprudential measures:
- The QCB implemented several macroprudential measures since the Spring of 2022 to discourage banks from relying on non-resident deposits, especially of short tenors.

Diversification and development:
- A decade of diversification efforts culminated in hosting the 2022 FIFA World Cup; the government is laying out its 3rd National Development Strategy to help achieve the ambitions of Qatar National Vision 2030.
- The 3rd National Development Strategy is to be unveiled in the summer of 2023.
Green finance and ESG:
- The Ministry of Finance has developed a Sovereign Green Financing Framework with a clear set of principles.
- The QCB created a dedicated department to define ESG policies, standard reporting framework and management of ESG risk and compliance.
- Related initiatives at the national level involving main regulatory bodies are being assessed.
Digitalization and fintech:
- Qatar upgraded its digital infrastructure leveraging the 2022 FIFA World Cup.
- The Investment Promotion Agency of Qatar embarked on partnerships to accelerate digital transformation and foster technological innovation domestically, including through FDI.
- The QCB recently launched the National Fintech Strategy, with detailed guidelines and standards under development.

Downside risks:
- Unfavorable global environment, including a sharper-than-expected global growth slowdown.
- Tighter and more volatile global financial conditions.
- Increased commodity price volatility.
- Further worsening of geopolitical tensions.
Upside factors:
- Accelerated reform efforts guided by the 3rd National Development Strategy could boost productivity and promote economic diversification.
- Sustained high hydrocarbon prices would further strengthen the outlook.
Overall assessment: Risks to the outlook are broadly balanced.

Sustain fiscal discipline while balancing transformation ambitions through the medium-term budget for 2023–25 developed after the 3rd National Development Strategy.
Maintain prudent monetary policy consistent with the currency peg to the U.S. dollar and continue effective liquidity management to strengthen transmission.
Continue macroprudential measures to reduce banks’ reliance on non-resident deposits, especially short-tenor deposits.
Continue high provisioning for NPLs and monitor asset quality as monetary tightening progresses.
Advance structural reforms—including green financing, ESG frameworks, digitalization, and fintech—to support economic diversification, productivity, and inclusiveness aligned with Qatar National Vision 2030.

IMF Staff statement following a May 2–11, 2023 staff visit to Doha.