Qatar’s economic diversification will get a further thrust with higher outlay for infrastructure projects in the State Budget for 2017.
For major projects, Qatar has budgeted QR93.2bn in the next financial year that runs from January to December 2017.
A closer look at Qatar budget for 2017 shows that “committed projects” would entail an expenditure of QR374bn, excluding oil and gas projects and those set up by government-owned companies.
The government has already announced that it would sign contracts for new projects with a total of QR46.1bn in 2017. This will include infrastructure and transportation projects worth QR25bn, projects related to FIFA World Cup 2022 facilities (QR8.5bn), health and education projects (QR5.8bn) and projects in other sectors (QR6.8bn).
Clearly, large infrastructure projects will be the main beneficiaries from the 2017 budget.
In preparation for the World Cup, the government has made “tremendous” investments in the country’s infrastructure – 47% of budgeted spending will be dedicated to major infrastructure projects.
Transport infrastructure will account for as much as 21.2% of total spending, as the government invests in new lines in the Doha Metro. With the government using the World Cup as a catalyst for economic diversification and to boost Qatar’s profile as a regional hub for tourism, culture and education, other sectors will also benefit from elevated capital expenditures, including health and education.
The budget for the next fiscal shows that the total allocation for key sectors such as health, education and infrastructure (QR87.1bn) made up nearly 44% of the total expenditure in the 2017 budget.
“This reflects the government’s continued commitment to delivering high quality social services,” points out HE the Minister of Finance Ali Sherif al-Emadi.
Adopted on December 15, the 2017 budget is based on the government’s expectations for oil prices to average $45 per barrel over the course of the year.
It estimates revenues of QR170.1bn and an expenditure of QR198.4bn, thus expecting to post a deficit of QR28.3bn.
The shortfall is expected to be covered by issuing debt instruments in the local and international financial markets, while maintaining its reserves and investments.
The implementation of major development projects is expected to have a positive impact on Qatar’s economic growth as the International Monetary Fund (IMF) expects the country to achieve an overall GDP growth rate of 3.4% in 2017, the highest in the GCC region.
In a recent interview with Gulf Times, BMI Research’s senior analyst Raphaele Auberty said government-led investment in infrastructure will be the main driver of economic growth in the run-up of the 2022 FIFA World Cup, ensuring that Qatar continues to outperform other GCC states through to 2022.
This, he affirms will boost Qatar’s profile as a regional hub for tourism, culture and education.
With many analysts forecasting Brent prices to average $55 for a barrel in 2017, they expect fiscal revenues to be significantly higher than projected by Qatar’s Ministry of Finance.
This will in turn give the government more leeway on the spending front; hence, researchers forecast Qatar’s spending to be higher than what is planned in the budget.
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