Qatar announced its budget for the new financial year, 2016, yesterday after its approval by an emiri decree issued by Emir Sheikh Tamim bin Hamad Al Thani.
The decree affirmed Qatar’s determination to continue sustainable development, focusing on major projects in health, education, infrastructure and transport, especially Qatar Rail projects and other projects linked to hosting the 2022 FIFA World Cup.
According to the German Press Agency, the state budget faces its first deficit in 15 years because of declining oil and gas revenue following lower global market prices.
Qatari Finance Minister Ali al-Emadi said estimated revenue in the 2016 budget was 156 billion riyals, down from 226 billion riyals in the previous budget. He explained that the reduction reflected a conservative average oil-price assumption of $48 a barrel, compared with $65 in the previous budget, in line with the sharp recent fall in oil prices and forecasts for the coming period.
Al-Emadi said the state would finance the deficit by issuing debt instruments in domestic and international capital markets. He noted that Qatar’s government had retained strong financial reserves at the Qatar Central Bank and substantial investments through the Qatar Investment Authority during the period of high oil and gas revenue.
He added that Qatar intended to preserve those reserves and investments. He also confirmed that the state budget included no revenue from central bank reserves or investment authority holdings, whose returns were reinvested to strengthen reserves and investments and support the country’s overall financial position.
Total estimated expenditure for 2016 was around 202.5 billion riyals, compared with 218.4 billion in the previous budget. The new budget deficit was expected to reach approximately 46.6 billion riyals because of the sharp fall in oil and gas revenue after global energy prices declined by more than 50% from 2014 levels.
To improve efficiency in current spending while preserving major-project allocations, the new budget retained high Chapter One allocations for salaries and wages, at 49.5 billion riyals compared with 47.5 billion in the 2015 budget.
Estimated current expenditure fell to 58.5 billion riyals from 71.2 billion in the previous budget, while capital expenditure fell to 3.7 billion from 12.2 billion in the current year’s budget.
Allocations for major projects rose by 3.3 billion riyals to 90.8 billion, compared with 87.5 billion in 2015, to continue implementing planned infrastructure development projects.
Qatar maintained substantial spending on the principal sectors of health, education and infrastructure, allocating 91.9 billion riyals, or 45.4% of total expenditure in the 2016 budget. This affirmed its continued policy of strengthening public spending in key sectors despite the current decline in revenue.
The finance minister said ensuring the completion and implementation of major projects in key sectors, alongside projects linked to hosting the 2022 World Cup, had been the main objective in preparing the budget.
Infrastructure received the largest share of the 2016 state budget, with allocations of 50.6 billion riyals, representing 25% of total expenditure.
The budget maintained support for citizens in all areas, including two billion riyals in housing loans through Qatar Development Bank, an increase of 25% from approximately 1.6 billion riyals in 2015. More than 6,000 beneficiaries had received these loans since 2013.