International Monetary Fund (IMF) has praised Qatar’s Third National Development Strategy and noted the upcoming NDS3 is expected to provide an ambitious reform agenda to guide the transformation toward a private sector-led, knowledge-based, more diversified and greener economy, as envisaged under QNV 2030.
Qatar’s NDS3, which was unveiled last month, outlines a transformative vision for the nation from 2024 to 2030, aiming at economic diversification, sustainable fiscal practices, and the development of a future-ready workforce.
The strategy focuses on seven key outcomes: economic diversification, fiscal sustainability, future-ready workforce, cohesive society, quality of life, environmental sustainability and government excellence.
In its recent assessment of Qatar’s economy, IMF said the country’s structural reforms continue to progress, including to enhance protection and mobility of expatriate labour, improve the business environment, promote public-private partnerships, and further attract private investment through the residency programme and broadened foreign ownership provisions.
The pension scheme has been expanded to more Qataris in the private sector to promote private sector employment. Digitalisation has continued to advance, and many climate initiatives guided by the National Environment and Climate Change Strategy and the Climate Change Action Plan are being implemented.
Qatar’s decade-long efforts to diversify the economy culminated into the successful hosting of the 2022 FIFA World Cup, IMF noted. After very strong performance in 2022 on the back of World Cup-induced buoyancy and high hydrocarbon prices, growth has been normalising, with real GDP growth in 2023 projected at 1.6%. Growth normalisation is expected to continue in the near term, with non-hydrocarbon growth supported by investment in public projects, construction of the North Field LNG expansion project, and their spillovers to logistics, manufacturing, and trade.
Visibility brought by the World Cup could continue to boost tourism. Medium-term growth is expected to average around 5.5%, boosted by significant LNG production expansion and initial reform gains from implementing NDS3.
Qatar’s banks are well-capitalised, liquid, and profitable, with the capital adequacy ratio and return on equity at 19 and 14.6%, respectively, in the second quarter of 2023.
Banks’ nonresident deposits fell by more than one-third from the recent peak, partially replaced by higher public sector domestic deposits, reducing vulnerabilities amid tight global financial conditions.
The NPL ratio continued to edge up to 3.8% but the provisioning coverage ratio is relatively high, close to 80%. Banks were resilient to the financial market turmoil from advanced economies in early-2023.
IMF concluded that Qatar has remained resilient to the recent global shocks and its economic outlook is favourable. Output growth is normalising as expected from the 2022 WC-driven boom.
The nation’s favourable medium-term outlook is supported by the significant expansion of LNG production in North Field and expected gains from the implementation of NDS3.
Risks are broadly balanced. Maintaining prudent macroeconomic policy and intensifying reform efforts will support Qatar’s resilience to shocks and accelerate its economic transformation.
The fiscal strategy should balance discipline with growth in the near term and facilitate the transition to more diversified, private sector-led growth over the medium term.
If downside risks to growth materialise and the ongoing growth slowdown sharpens, some fiscal space could be deployed through productive and efficient spending while maintaining broad fiscal prudence.
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