(Adds austerity measures, growth forecast, context)
By Tom Finn
DOHA Feb 7 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 on Tuesday.
"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.
In the past 18 months, between $8 billion and $9 billion of
such projects were given to the private sector, he added without
Emadi said the government was spending close to half a
billion dollars a week on capital projects, focusing on
preparations to host the 2022 World Cup soccer tournament.
Ninety percent of World Cup projects have been awarded and
two-thirds of them will be delivered in the next 24 months, he
He predicted Qatar's economy would grow 3.4 or 3.5 percent
this year. It will face a drag in 2018 when Qatar, along with
other countries in the region, introduces a value-added tax to
boost non-oil revenues; Emadi estimated the tax would absorb
between 1 and 2 percent of gross domestic product.
Also, the country's population, which has been swollen by
foreign workers on infrastructure projects, is expected to peak
between 2017 and 2019, Emadi said. However, officials believe
government projects will underpin growth until the World Cup and
are adjusting spending plans to ensure there is no sudden
reduction in economic stimulus after 2022.
"What we're trying to do is really prioritise 2022, so we
have a good and moderate growth rate...After (2022) it will
mainly be infrastructure projects. The airport can have some
sort of expansion and part of the rail (network) can have some
sort of expansion. We have highways that need to be done after
2022, the sewage system."
(Writing by Andrew Torchia)