QNA
Doha
Qatar’s general budget for the fiscal year 2023 showed QR199 billion expenditure estimates, and a QR29 billion surplus being directed to pay public debt, support the reserves of the Qatar Central Bank (QCB), and increase the capital of Qatar Investment Authority (QIA), a move that reflected the country’s keenness to stimulate and diversify its economy.
Qatar’s budget surplus, the highest in the last decade, was ascribed to a 20.8 percent increase in oil revenues with average oil prices having risen to USD 65 a barrel, prompting an 16.3 percent increase in total revenues, compared to the 2022 budget, as well as a 2.6 percent expenditure decrease with a stop in the country’s expenses for the FIFA World Cup Qatar 2022.
Comparing the estimated and actual surplus and deficit data in Qatar’s budgets over the past 10 years showed maximum estimated and actual deficits in the fiscal year 2016 with QR -46.5 billion (estimated) and QR-50.8 billion (actual), QR -28.3 billion (estimated) and QR-44.7 billion (actual) in 2017. The surplus amounted to QR 4.3 billion (estimated) and QR 7 billion (actual) in 2019, while the surplus shifted in the fiscal year 2014-2015 from QR12.8 billion (estimated) to a QR-4.2 billion deficit (actual), and from 0.5 billion (estimated) in 2020 to QR-10.4 billion (actual), and the deficit turned from QR-28.1 billion (estimated) in 2018 to a surplus of QR 15 billion (actual), and QR-34.6 billion (estimated) to QR 1.6 billion (actual) in 2021.
The 2023 budget shows that 22 new projects with a total of QR9.8 billion will be launched as part of the country’s scheduled QR64 billion expenditure of the general budget on major projects for the next year. Of these projects, 14 projects, estimated at QR 5.5 billion, are based on an assessment of priorities, and QR 4.3 billion eight projects.
The increase in operating expenditure allocations in the new budget is attributed to the public utilities and infrastructure sustainability, which will have an important role in the post-World Cup phase, with the country having built an integrated infrastructure that will be a fundamental pillar for the development and prosperity of the local economy.
Minister of Finance HE Ali bin Ahmed Al Kuwari stated that financial resources were allocated for existing commitments, programs and projects of the third national development strategy, and the approved infrastructure projects, especially those related to the development of existing and new citizens’ land plots. His Excellency revealed that the country would continue plan to raise the expenditure efficiency and allocate financial resources to reduce government debt.
The 2023 budget showed total allocations for salaries and wages, current expenditures and incidental expenses recording 31%, 34% and 3% respectively versus 29%, 33% and 2% in the 2022 budget, while capital expenditures decreased to 32 percent from 36 percent in 2022.
In an exclusive statement to Qatar News Agency (QNA), the economist and financial analyst Ahmed Akl outlined that the reduction of expenditure on the capital projects and the decrease in allocations were owing to the success of projects that have been implemented in the previous periods, along with their transition to the ample operational stages for the country’s needs during this period, albeit what has been implemented prior to the launch of the world cup 2022 was a station on the final way to attain Qatar 2030 requirements, which is the largest and the most comprehensive vision.
He clarified that one of the most important features of the new budget is the existence of a surplus against a deficit that existed in the 2022 budget, adding that this surplus is partially due to the adoption of an expected price of a barrel of oil at USD 65, compared to USD 55 for the year 2022, which resulted in an increase in the expected oil revenues from QAR 154 billion in the current year to QAR 186 billion in 2023.
Akl stated that the second feature within the features of this budget is based on maintaining a level of spending very close to its level in 2022, despite the end of the most important event in the State of Qatar represented in the FIFA World Cup Qatar 2022, and the accomplishment of several major projects, indicating that maintaining the same levels of spending is very positive and encouraging for the markets, and will have a crucial and direct impact on financial markets, and the economic, trade and investment movement in general.
He pointed out that the substantial spending on the health and educational sectors with roughly 20 percent from the total budget expenses primarily reflects the state’s persistent orientation towards investment in the human cadre, where part of the new budget has been allocated to expand and develop schools and educational institutions, in addition to further vital projects in the area of developing the health care, and expansion of the health facilities approved for the next year as one of the absolute priorities of the new budget.
The economist and financial analyst noted that the reference price for a barrel of oil in the new budget at USD 65 remains based on the projections from numerous consulting firms and global banks, which is considered an excellent price in light of the current circumstances, and safe in view of the expectations of a recovery in the global energy markets, and the return of oil prices to rise, adding that it is true that sometimes it may be less or more at the level of the year as a whole. According to his estimation, it will be acceptable and capable of facing shocks, especially in the coming period of the year 2023, and the return of the global economy to expand again.
Commenting on the impact of raising the interest price on the oil prices in general, the economist and financial analyst Ahmed Akl said that he is aware of the fact that a rise in the interest prices is an additional strength to the dollar, which implies a pressure on the level of oil prices, he explained, adding that the current situation is unusual and exceptional, because the reduction in oil prices or putting pressure on it is not only due to the strength of the dollar and the high interest rates, but also to the scarcity of supply, Russian-Ukrainian war, in addition to an upcoming harsh winter, in which the demand for oil is predicted to dramatically increase. The reopening of major global factories and economies, such as the Chinese economy and others is yet another factor, he added, pointing out that all of these factors significantly contribute to the rise in demand, in addition to the occasional scarcity or stability of supply.
For his part, Economic Analyst Ramzi Qasmieh said in a similar statement to Qatar News Agency (QNA) that the most important features of the state’s new budget are that the education and health sectors taking about 20 percent of expenditures, which indicates the great interest that Qatar attaches to the human asset and investing in it.
Qasmieh considered that the USD 65 a barrel assumed price in the budget is reasonable, given that oil prices during the current year were higher than this level. He added that -in most of its revenues- the State of Qatar relies on energy, and on gas contracts, whose derived revenues fluctuate less than oil price fluctuations. The Economic Analyst stated that Qatar signs long-term contracts with countries importing Qatari gas, with the degree of fluctuation of gas prices in those contracts being less than those of oil, concluding that economies that depend entirely on oil will be more exposed to price fluctuations.
Qasmieh pointed out that the state continues its approach of spending on capital projects and completing them, considering that the expenditures allocated to them experienced only a minor decline from those of year 2022, despite the completion of the World Cup projects - demonstrating the state’s keenness to continue stimulating economic growth.
It is noteworthy that HE Minister of Finance had recently confirmed that the general budget for the year 2023 was drawn up in a way that allows for a dynamic and open economic environment that is capable of competing globally and is resistant to future changes, provided that this occurs in a stable, safe and attractive financial environment that attracts foreign investments and stimulates their national counterparts. It is characterized by low inflation rates, encouraging and supporting the private sector to play its expected role in achieving sustainable development.
The Economic Analyst said that the new budget was based on taking into account that the economy of the State of Qatar is one of the fastest growing economies in the region, expecting the gross domestic product to grow by 4.5 percent in the year 2023, according to statistics issued by the International Monetary Fund (IMF).
Qasmieh explained that based on IMF’s expectations, global inflation rates in 2023 will exceed 6.5 percent, whereas in the State of Qatar, it is expected to reach 3.3 percent in 2023, keeping in mind that the state has taken effective measures to maintain low inflation rates. These measures include fixing fuel prices, subsidizing food and beverage products, and exempting imported products from customs duties.