‘Pressure on Qatar state finances easing but austerity needed’

Reuters

Pressure on Qatar’s state finances is easing because of higher oil prices and the government may not need to issue an international bond this year, but it is still seeking ways to save money, finance minister Ali Sherif al-Emadi said.
“We may not issue a bond this year given where oil prices are – right now we are close to break-even,” Emadi said in a briefing on the financial outlook for the world’s top liquefied natural gas exporting nation. Qatar’s last international bond issue was a $9 billion sale last May. Emadi said another issue was an option in the 2017 budget, but no decision had been made on whether to exercise it.
His comments illustrated how higher oil prices are to varying degrees improving the outlook for oil and gas exporting countries around the Gulf. Brent oil averaged $45 a barrel last year but is now trading around $55. Qatar’s 2017 budget, announced in mid-December, projected its deficit would shrink to 28.3 billion riyals ($7.8 billion) from 46.5 billion riyals planned for 2016. Since the 2017 budget assumed an average oil price of about $45, the deficit is now close to disappearing, Emadi said.
However, he made clear that an austerity drive would continue. The 2017 budget envisages spending will drop to 198.4 billion riyals, 2 percent lower than the 2016 plan, because of a 9 percent cut in government operating expenses and a 1.5 percent fall in the total salary bill.
“We are becoming more efficient on the operating side of the government but we need to do more on investment and the capex side,” Emadi said. For the sake of fiscal discipline, Qatar will not use assets from its sovereign wealth fund to fund its deficit, and the government is scaling back state projects which it thinks the private sector can handle instead, he said.