By Santhosh V Perumal
Business Reporter
Qatar ranks 6th among the world’s leading project financing countries, Minister of Economy and Finance HE Yousef Hussein Kamal has said.
Addressing the fourth World Islamic Infrastructure Finance Conference, Kamal said Qatar financed projects worth $ 8.6bn during the first nine months of this year, a 37% growth compared to the same period of last year. The spending accounts for about 33% of the total infrastructure projects financing in the Middle East and North Africa, QNA reported the minister as saying.
Qatar’s economic prospects, underpinned by liquefied natural gas (LNG) production and capital spending on physical and social infrastructure, look upbeat, Kamal said.
“Despite the global financial crisis, Qatar’s future prospect is still optimistic and is supported by expansion in the exploration and production of LNG and also spending on infrastructure, education and health sectors,” Kamal said.
Spending on infrastructure is one of the most important factors that pushes forward not only the sustainable development but also ensures high economic growth, he said.
“It is one of the state’s priorities to channel large volume of resources to develop the infrastructure and that is why QR37.9bn or 40% of the total budgetary expenditure has been allocated for development projects in 2009-‘10,” he said.
This (allocation of larger proportion of the budget to developmental activities) reflects that the country has adopted expansionary policies in terms of public financing in the budget so as to contain the impact of the global financial crisis on the economy and to continue with the developmental process, he said.
Kamal said during the last five years, a total of QR163bn had been allocated for the development works and this spending has reflected on the economic growth of Qatar. The country’s gross domestic product achieved an average annual growth of 33.7% between 2004 and 2008.
Highlighting the robustness of the Islamic banking industry during the global financial crisis, Kamal said the largest 500 Islamic banks in the world have seen their total assets increase by 26.8% year-on-year in 2008 compared to a 6.8% growth in the total assets of largest 1,000 conventional banks.
“This is an evidence to show that future optimistic expectation for the growth of Islamic banking and it is expected that Islamic banks will maintain their high growth in the near future,” he said, adding there is also a need to ease the obstacles, which obstruct the participation of Islamic banks in project financing.
Al Mal Bank managing director and CEO Nazim Omara said in 2008, the project and infrastructure asset class accounted for around $1.6bn (10%) of the $14.9bn of sukuk issue that came to the market.
“As project financing matures as an asset class in the Gulf, Islamic finance will continue to adapt to project structures,” he said.
Haseeb Siddiqui, Ernst & Young executive manager (financial economic solutions), said a total of $18bn was raised in the Gulf Co-operation Council debt market in the first half of this year, of which 94% constituted bonds and only 6% came from sukuk.
“Sukuk will become a mainstream funding source for infrastructure; reducing dependence on public revenues and banks,” he said, adding a right enabling environment was a prerequisite for unleashing the sukuk potential.
|
