The passing of the state budget for 2016 this month proves that Qatar has effectively ended the practice of starting its fiscal year in April. This leaves Kuwait as the sole country within the Gulf Cooperation Council (GCC) which runs its fiscal year between April and March.

Not surprisingly, the budget is conservative on revenues but not necessarily with the expenditures. The drop in oil prices over the past 18 months leaves the authorities with no choice but to project lower revenues. Conversely, the country is committed to completing a number of projects ahead of hosting the World Cup 2022, undoubtedly good news for sectors like construction.

The 2016 budget projects revenues of $42.9 billion, considerably below that of $62 billion assumed in 2015. The culprit are the adverse developments in the international petroleum market, where the stakes are high for Qatar being a leading exporter of liquefied natural gas (LNG).

Yet, total expenditures for fiscal year 2016 are put at $55.6 billion compared to $60 billion in 2015. The ensuing shortage is something abnormal in a country otherwise known for posting budgetary surpluses.

Still, financing the deficit should not be exceptionally difficult. Qatar possesses a substantial amount of sovereign wealth funds, estimated at $256 billion held by Qatar Investment Authority. Qatar managed to accumulate this notable amount, equivalent to several times the 2016 budget, on the back of several years of surpluses.

Additionally, Qatar has the capacity to issue debt instruments in the local and international markets, enjoying sovereign credit ratings within the A category from Moody’s, Standard & Poor’s and Fitch.

The assumed average oil of $48 per barrel, albeit lower than the $65 per barrel used in 2015, remains problematic simply for being above prevailing market rates. Oil prices have dropped to below $30 per barrel, something unheard of for more than a decade.

The business community ought to be pleased with government’s determination to allocate sizeable funds for key infrastructure and with the promise of a positive spillover effect.

Infrastructure projects soak up 25 per cent, or $13.9 billion, of total spending. About 45 per cent of total expenditure is allocated for health, education and infrastructure.

For good reason, there is particular emphasis on transport, which translates into developing multibillion rail projects ahead of 2022. Qatar Rail is overseeing construction of the integrated rail network, including the locally vital Doha Metro as well as the Lusail Light Rail Transit (LRT). Another project concerns a long distance connection within the GCC.

The first phase of Doha Metro is set to be operational in 2019 with three lines, Red, Gold and Green, together comprising 37 stations. The second phase involving the more ambitious Blue line with 72 stations should be complete in 2026.

Trouble is the steady fall in oil prices will definitely affect economic performance. The prospect of a higher deficit or lower spending cannot be ruled out in light of the adverse developments in the oil markets.

Nevertheless, the economy should experience a soft landing thanks to state reserves and thus its capability to finance any shortfall.

The writer is a Member of Parliament in Bahrain.