Falling oil and gas prices were reshaping fiscal priorities in the world’s largest liquefied natural gas exporter, affecting Qatar’s economic aggregates directly and indirectly. Growth declined to around 3.7 percent in 2015, GDP figures weakened, and the 2016 budget showed a deficit reported at 31 percent, or about 46.5 billion riyals, for the first time in approximately fifteen years.
Qatar, which finances its budget primarily through energy revenues, faced slowing macroeconomic indicators as prices fell. Policymakers drew up an initial emergency plan to control spending, rationalize consumption, and reduce current and investment expenditure. This formed part of a broader review of fiscal and monetary policies to reflect economic conditions and narrow the gap between falling revenue and high spending, while preserving priorities in health, education, infrastructure, and the 2022 World Cup.
The non-oil sector, growing at 10 percent annually, remained the government’s main hope for stimulating the economy and restoring balanced growth. For years, successive budgets had used highly conservative oil-price assumptions well below market levels, creating large surpluses that strengthened reserves and sovereign wealth fund assets. Facing lower revenues and continuing expenditure, the government now budgeted oil at $48 a barrel, described in the source as $12 below the global price. This raised questions about its expectation of oil above $50 in a country producing around 650,000 barrels of oil daily and 77 million tons of LNG annually, with gas then priced below $1.9 per million energy units.