Infrastructure upgrade is likely to get a sizeable outlay in Qatar’s budget for 2012-13, which is expected to be announced in the next few days. Indications are that the next budget, the largest ever, will take $65 per barrel as the base oil price as against $55 in the 2011-2012 and 2010-2011 budgets.
In March, Qatar pushed back the release of the country’s budget for the coming fiscal year to end-May “because of changes to the government’s accounting system and the way it prepares budgets”. The annual budget is usually announced by April 1.
“A nearly 20% increase proposed in the base oil price for Qatar’s 2012-13 budget, the first time in three years, points to higher receipts and outlay,” a senior Doha-based economist said yesterday.
Besides infrastructure upgrade, key sectors such as education and health may get a substantial outlay in view of the country’s thrust to the Qatar National Vision 2030 and National Development Strategy (NDS) 2011-16.
NDS 2011-16 will balance challenges of QNV 2030, he told Gulf Times.
Qatar’s budget spending will have totaled QR139.9bn in the fiscal 2011-2012 with a significantly higher outlay for major infrastructure projects and the education and health sectors.
After being chosen to host the 2022 FIFA World Cup, Qatar had allocated a substantial amount of its annual budget in the 2011-2012 fiscal for infrastructure development. According to the NDS, Qatar plans to invest over QR130bn in 2011-2016 through state-run companies, on roads and utilities among others.
HE the Minister of Economy and Finance Yousef Hussein Kamal has said the 2012-13 budget would be “much bigger” than the previous one and that inflation would average 2-to-3% this year.
In a recent analysis, QNB Group had said the price of oil would “almost certainly remain comfortably above $65 a barrel”, which is the proposed price assumption for the forthcoming Qatari budget.
Citing an International Energy Agency report, the QNB Group said it still expects prices to remain high. The futures markets see oil averaging around $113 this year, falling to $106 in 2013.
The median of economists’ forecasts is higher, at $115 in both years. This compares to an average price of $90 since the start of 2008.
Oil prices, at a range of $80-100 would not only exceed the budget breakeven point for a large number of Opec producers, but will also provide a fair price for both producers and consumers, as has been indicated by a number of officials from oil producing countries.
The concern, however, is that persistently high prices — average annual prices only exceeded $100 for the first time last year — could harm the global economy and hence undermine future demand and prices.
In the year up to March, Qatar booked a huge budget surplus, earning more than double the conservative estimate on which the budget for fiscal 2011-12 was based.
Qatar’s crude price averaged $112.84 a barrel between April 2011 and March 2012 while the budget estimate was $55 a barrel, data complied by QNB’s Economics, Financial Analysis & Research wing show.
Qatar had been recording surplus budgets every year since 2000. While a fraction of the surplus was used to retire debts, a chunk had also gone into building up the state reserve, infrastructure upgrade and boosting outlays for two key sectors — health and education. According to the Ministry of Economy and Finance, the outstanding on Qatar Government’s external debt stood at QR87.7bn in fiscal 2011-12 that ended in March this year.
A recent Economist Intelligence Unit report said Qatar has taken on large amounts of debt to finance new gas and petrochemical facilities, but its substantial foreign assets and revenue inflows from hydrocarbons exports will enable it to meet its debt-service obligations easily.