Posted on April 04, 2015
The International Monetary Fund (IMF) expects Qatar's growth to rise to around 7 percent in 2015 and describes its short-term outlook as positive, Qatar Tribune said. In a report, the IMF's Executive Board lauded Qatar for diversifying its economy while retaining its key role in the global natural gas market.
Qatar's economy maintains strong growth momentum despite the large drop in oil prices since summer 2014. Real GDP growth is stable at 6 percent over the past three years, mostly driven by a double-digit expansion of the non-hydrocarbon sector, the report said. Falling global commodity prices have helped reduce inflation below 3 percent despite a tight real estate market. "Non-hydrocarbon growth should stay in double digits. Consumer price inflation is contained, although real estate prices have grown quickly," the report said.
The IMF, however, cautioned that the recent large drop in oil and natural gas prices will lead to a substantial deterioration of the fiscal and external balances, calling for intensification of diversification efforts and some fiscal consolidation in the medium term. The oil prices fall will lead to a substantial deterioration in fiscal and external balances. In sharp contrast to previous years, the budget will be in deficit from 2016 onward and the current account surplus will largely be eliminated.

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"While there is no immediate concern about fiscal sustainability from oil price assumptions, additional spending and revenue measures worth about 5 percent of non-hydrocarbon GDP are warranted over the medium term to secure inter-generational equity in the context of low oil prices," the IMF said. The report called for deepening of budget reforms. Significant progress has been made in setting up the macro-fiscal unit and public investment department, and current expenditure growth has been restrained.
The IMF said the strategy document being prepared by the Ministry of Finance should formulate binding medium-term fiscal objectives and communicate expectations about the future trajectory of budget expenditures and taxation. The fixed exchange rate regime remains appropriate for Qatar. The peg to the US dollar has served Qatar well in periods of both high and low oil prices by anchoring prices of tradables and providing stability to income flows and financial wealth.