Report: Gulf crisis to increase Qatar’s budget deficit

Shabina Khatri
Jul 30, 2017 · 3 min read
Photo for illustrative purposes only. Credit: Jude Vincy/Flickr

Qatar’s efforts to ensure the ongoing blockade doesn’t affect residents is having a big impact on its budget, according to BMI Research.

In a new report this week, BMI forecasted a larger-than-projected deficit for 2017 due to the costs of the action against Qatar.

In its report, the group said this is because Doha will likely continue to foot the bill for rising prices of food and medicine “in order to maintain support for its authority among the Qatari population.”

Construction on Al Bayt Al Khor stadium site. Credit: SCDL

It also forecast that the government will postpone plans to lower public sector wages and decrease subsidies for now, while moving forward with spending on big projects like World Cup preparations.

This will put even more pressure on spending in the coming months.

However, Qatar should be able to absorb the extra expenditure without risking its stability due to its “large foreign reserves and undisrupted hydrocarbon exports,” the report added.

Budget planning

Earlier this month, Qatar’s foreign minister said the country now pays 10 times as much money to import food and medicine into the country due to the blockade.

Sheikh Mohammed bin Abdulrahman Al Thani added that the government was covering the “extra costs” for residents and that “Qatar has the resources to do that.”

Photo for illustrative purposes only. Credit: Omar Chatriwala/Doha News

That said, the boycott has put a big damper on Qatar’s budget planning, which has become more meticulous over the years.

In December, Qatar’s Emir approved a budget that slightly cut spending to help manage a forecasted QR28.3 billion ($7.8bn) deficit.

However, this figure was much smaller than the QR46.5 billion estimate Qatar made for 2016, when it saw its first deficit in 15 years.

Photo for illustrative purposes only. Credit: RasGas

Whether 2017’s deficit is smaller than last year’s remains to be seen. BMI does not provide any actual figures in its forecast.

But it did say that Qatar will continue to fund any fiscal shortfalls by borrowing money, leaving its sovereign wealth fund untouched.

And it forecast that revenue growth should stay steady thanks to Qatar’s natural gas reserves and rebounding oil prices.

Thoughts?

Doha News

Covering breaking news, politics, business, culture and life in and around Qatar since 2009.

Shabina Khatri

Written by

Journalist, editor, story-teller.

Doha News

Doha News

Covering breaking news, politics, business, culture and life in and around Qatar since 2009.

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