Positive reports about the Qatari economy are abounding nowadays and for good reasons. Put simply, the country is putting its wealth, mainly generated from the hydrocarbons sector for wise economic uses.
In reality, the Qatari government is doing the right thing by using petroleum-generated resources to diversify away from oil and gas sector. This partly explains the recent commandment made by the IMF of the drive of diversifying sources of treasury income.
To be sure, news stories attributed to IMF suggest that the fund believes that Qatar’s budget for 2012-13 would possibly post a surplus of $10.7 billion. The financial year in Qatar runs from April to March.
This is hardly surprising when judged by the original budgetary statistics. The financial authorities in Qatar prepared the budget for fiscal year 2012-13 with projected revenues and expenditures of $56.6 billion and $48.9 billion, respectively. As such, the budget was prepared with a projected surplus of $7.7 billion, certainly something abnormal in public finance, typically known for expecting hardships when releasing the figures.
Still, this very level of surplus suggests officials opted for spending a considerable portion of stronger revenues. Suffice to say that financial the authorities had assumed a conservative figure of $65 per barrel. Undoubtedly, this is considerably below prevailing market rate, thereby suggesting a sizable jump in state revenues.
Similar to other Gulf Cooperation Council (GCC) countries, the petroleum sector including gas is exceptionally vital for public finance in Qatar by virtue of comprising more than two thirds of treasury income. However, Qatar stands out through the self-rewarding practice of investing a portion of its sovereign wealth funds or SWF abroad, in turn helping in expanding and diversifying revenue sources.
By one account, Qatar’s SWF could reach as high as a whopping $250 billion by the year 2017. It is widely believed that the country’s SWF hovers around $100 billion, a sizable amount when compared to the country’s economy.
As to economic size, the IMF puts Qatar’s gross domestic product (GDP) at a reached a new record of $191 billion in 2012 on the back of growth level of a real growth rate of 5.2 per cent. Amongst others, this translates into Qatar occupying the third largest economy with the GCC grouping after Saudi Arabia and the UAE. For its part, Kuwait ranks the fourth largest GDP within the GCC with a slightly smaller amount.
The GDP level translates into a per capita income in excess of $100,000 when compared into a current population of around 1.8 million. This is second to none worldwide, as other nations could compare to their per capita income to that of Qatar.
The exceptional statistics serves as testimony of Qatar’s wealth. Still, this is only an average amount, inclusive of migrant workers and their dependents, collectively compromising more than 80 per cent of total population.
Yet, Qatari nationals get special treatment from their leadership, bestowing on them sustained rises in salaries and other perks. The subsequent increases saw remuneration of Qataris more than doubling over the past few years.
Additionally, all such positive economic developments are occurring in the near absence of inflationary pressures. As it the case with the rest of GCC countries, inflation rate in Qatar stands at 3 per cent. This is a departure from the practice of the past few years notably 2007 when economic growth coupled with steady inflation rates.
The GCC member of state of Qatar is showing capability of showcasing an economic miracle. But the challenge now relates to sustaining the economic achievements in a globalized economy.
The writer is a Member of Parliament in Bahrain.