Revised figures for Qatar’s fiscal outturn in 2011/12 show that revenue, expenditure and surplus all reached record levels. QNB Group expects to see a similar pattern in 2012/13, when the surplus is forecast to rise to QR58bn.
The revised figures from the Ministry of Economy and Finance were published in Qatar Central Bank’s recent Quarterly Bulletin. These substantially updated the initial official fiscal estimates for the fiscal year that ended in March.
The updated figures show that revenue grew by 42% to QR220bn (US$60bn), surging ahead of the previous record set in 2009/10. Expenditure was also at a record level of QR166bn, up 16% on 2010/11. As a result there was a fiscal surplus of QR54bn, or 8.6% of GDP, higher than the 7.1% given in the initial estimates and well above the 2.8% recorded in 2010/11.
The core of Qatar’s fiscal revenue naturally comes from oil and gas. This rose by 35% to QR179bn in 2011/12 as oil prices averaged US$113/barrel. It is comprised of three components: royalties and taxes from oil, those from gas, and a dividend drawn from Qatar Petroleum (QP).
The dividend from QP is drawn from the state-owned company’s profits and was QR26bn last year, but has been as high as QR54bn in 2009/10. These profits include whatever is left over from its oil and gas production after the payment of royalties on sales (12.5% for gas and 20% for oil), taxes on its profits (50% for gas and 85% for oil), the revenue shares of private operating partners and operating costs. Also included are profits from QP’s downstream operations, such as its 51% stake in Industries Qatar.
Combining the QP dividend with oil and gas taxes and royalties shows that in 2011/12, at least 81% of revenue was related to the hydrocarbons value chain.
Significantly, the “other revenue” line of the budget, which includes all the non-hydrocarbon sources of revenue, surged by 78% in 2011/12. The largest part of this revenue comes from corporate taxation which dipped in 2010/11, following the reduction in the tax rate on foreign companies to 10%, but it has more than doubled in the latest year as corporate profits have expanded. The 2012/13 budget forecasts a further sizable increase in this area and expects further corporate profit growth to boost the tax revenue to QR54bn.
On the expenditure side, the sharpest annual increase in 2011/12 was in interest payments, up 72% because government debt had increased by 54% during the 2010/11 fiscal year. However, at just QR9.6bn, interest payments only comprised 6% of expenditure. Salaries and wages also registered a sizable increase, by 28%, largely as a result of pay increases for nationals introduced in September 2011.
Overall current expenditure rose by 17% and was 41% above budget, a larger overspend than usual, while capital expenditure rose by 13% but was 14% below budget.
The 2012/13 budget expects revenue of QR206bn, which would be slightly down on last year, based on a conservative oil price of US$65/barrel. The oil price has already averaged $106 in the first four months of the fiscal year, and so hydrocarbon revenue should be comfortably above budget. QNB Group forecasts a 10% rise in revenue to QR243bn.
The budget set aside QR116bn for current expenditure, almost the same as in 2011/12, whereas QNB Group expects this to rise slightly to QR124bn. The capital budget is set at QR62bn, a 24% rise on the 2011/12 outturn. This is close to QNB Group’s forecast, as the imperative to get major infrastructure projects underway should ensure that the allocated budget is almost fully utilized.
Overall, QNB Group expect a surplus of QR58bn in 2012/13, which would be twice the level that is budgeted (QR28bn) and set a new record in absolute terms.
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