HH the Emir Sheikh Tamim bin Hamad al-Thani speaking at the inauguration of the 44th ordinary session of the Advisory Council.
The Emir stresses the government will continue with infrastructure and human development projects despite the decline in oil prices
Qatar will put together a state budget for 2016 that avoids a big deficit despite the effect on revenues from low oil and gas prices, HH the Emir Sheikh Tamim bin Hamad al-Thani said yesterday.
“It will take the fall in oil prices into consideration, so as to avoid a big budget deficit that may cause harm,” Sheikh Tamim said in a speech, inaugurating the 44th ordinary session of the Advisory Council.
He noted that the coming budget would focus on efficiency in government spending. It would also tend to promote growth and expansion in non-oil sectors to diversify the economy.
Sheikh Tamim said the government would continue to spend on building infrastructure, social welfare projects and diversifying the economy.
But he said Qatar would in future rely more on the private sector and give it more room to operate without competition from state firms. A comprehensive review of all state-owned companies has been carried out, he said.
“After submitting this review to the Supreme Council for Economic Affairs and Investment, I have directed that subsidies for a number of these companies be ceased, and some to be privatised,” Sheikh Tamim said without naming the firms.
Sheikh Tamim said the drop in energy prices could help Qatar correct “negative phenomena” that had accompanied the country’s astonishing accumulation of wealth over the past two decades.
He warned of “wasteful spending, overstaffing and a lack of accountability” in the country, and raised concerns about “dependency on the state to provide for everything”.
This “reduces the motivation of individuals to take initiatives and be progressive,” he said.
The Emir said that legislative policies in Qatar were primarily directed to achieve the goals specified by the Permanent Constitution, namely: to proceed with establishing and developing the state of law and institutions, organising the three powers of the state, maintaining and promoting the basic components of the family and society, and the creative balance between respect for the citizens’ rights and the public interest of the society and the homeland, and providing means of a decent life for the Qatari citizen now and future.
“In the past years we issued, with your valuable contributions and diligent effort, many legislations in all these fields, especially regarding the organisation of the state apparatus, health and education, organising the economic activity, providing care for the family and the community, etc. We still have more to do because our determination to pursue progress for our country and the well-being of our people is limitless,” the Emir said.
Despite the instability in the Middle East, and the sharp drop in the oil and gas prices, the Emir said that Qatar’s economy had maintained its strength through 2014 with the growth rate of GDP at constant prices reaching about 6.1%.
“Its importance is noticeable when compared with the growth rates in the other oil-exporting countries in the Middle East and North Africa, where the growth rate was 2.4%, and with an average growth rate standing at 3.6% of gross domestic product in the GCC countries, to which we belong,” the Emir noted.
What was more striking was that at the time of a drop of 1.5% in the contribution of the main component of GDP, which is the oil and gas sector, the non-oil sector contribution had increased by about 11%, the Emir pointed out.
The Emir said that this growth had been coupled with the continuation of a high level of confidence in Qatar’s economy by global rating agencies. Qatar has achieved advanced positions in global competitiveness indexes.
“Also, a global credit rating institution has upgraded Qatar Stock Exchange to Emerging Markets Status (EMS) from Frontier Market (FM).”
However, the Emir cautioned that the steep decline in energy prices required alertness.
“I stress that it requires caution and alertness but not fear. Differentiation here is important, alertness is realistic and useful in public policies, but fear is not realistic and harmful, and does not help in drawing up the right policies, as it spreads the sort of climate that negatively impacts the economy and investment, and hence becomes like a false self-fulfilling prophecy,” he underlined.
“Caution must prompt us to be frank with each other, to band together in the face of challenges, and to be vigilant in rejecting the two extreme trends: the unjustified panic on the one hand and the self-delusion that is reflected in embellishing reality for self-satisfaction, on the other hand.”
He noted that Qatar had passed through much more difficult stages than the current one when its economy was not at this level of configuration and the energy industry in the country had not reached at such a high level of development.
“But the key to passing through this stage safely is that each of us should realise that as he benefited during the times of rapid growth and high oil prices, he should also bear with us the tasks, responsibilities and burdens of this phase.
“The participation by all, each according to his ability in bearing the burden, is fair. The citizen has no problem in making a contribution when he feels that there is fairness in the matter. ‘Allah does not assign burden to any soul except what is within its capacity,’ verily true are the words of Allah,” the Emir said.
He urged hardworking to keep the development process on the right track, despite the sharp decline in the oil prices, because the right development was the one that would protect the country from the negative effects of oil and gas price fluctuations in the future and from the risks of changes in the global economy.
“Since 2008 we have taken precautions against that in Qatar National Vision 2030 and in the National Development Strategy of the State 2011-2016. On this occasion, I stress that despite the decline of prices in the energy market, we will continue to implement the infrastructure development and human development projects.”
The Emir said that Qatar National Vision 2030 aimed at transforming Qatar into an advanced country, capable of achieving sustainable development and ensuring the continuation of a decent living standard for its people, for generations to come, by seeking to develop a diversified economy, with diminishing dependence on hydrocarbons, and where investment is directed towards knowledge-based economy, and the private sector grows in importance.
He said that the 2011-2016 National Development Strategy had crystallised the development priorities during this period, which include sustaining economic prosperity, upgrading infrastructure, raising natural resource management efficiency, diversifying the national economy, activating the private sector role and promoting human development, especially in the fields of education, health and environment protection.
Preparatory work, he said, had begun to draw up the National Development Strategy 2017-2022. “Here I would like to indicate through you to the ministers and all the staff involved in the National Development Strategy within and outside the state apparatus, that the items I have mentioned are objectives that could be accessible through a clear-cut action plan with proper indicators and benchmarks to measure the implementation success.”
The Emir emphasised the need to plug the gaps in the planning framework, improve co-ordination across the sector and among different sectors and to focus on outputs and outcomes.
“It is true that international ratings published by newspapers from time to time about the ranking of Qatar in this or that field are encouraging and optimistic, but what is most important is our own assessment of the results and how much are they real and tangible?”
Regarding the efficiency and feasibility of government spending, the Emir said that the general budget for the fiscal year 2016 was being prepared to begin on January 1. It would take the fall in oil prices into consideration, so as to avoid a big budget deficit that might cause harm that surpassed the balance of payments to the overall economy.
The Emir said that the high oil prices had brought immense benefits to this country and its people, but no one denied the accompanying negative phenomena, namely, the tendency towards wasteful spending, some overstaffing in institutions and the lack of accountability for mistakes in many cases, because availability of funds could be used to cover up failure in some institutions.
It might also lead to dependency on the state to provide for everything, which reduced the motivation of individuals to take initiatives and be progressive.
“We must transform the mandatory spending control at this stage into an opportunity to face those drawbacks and we should not miss this opportunity,” the Emir stressed.
He noted that the coming budget would focus on efficiency in government spending. It would also tend to promote growth and expansion in non-oil sectors to diversify the economy.
The Emir said that the inflation rate for the current year was expected to be in the range of 2%, and despite the fact that this rate was low, the government should not hesitate at encouraging competition and at the same time controlling prices to achieve financial and economic stability.
On strengthening the private sector and economic diversification as well as limiting the state’s competition with the private sector, the Emir said that a comprehensive review of all state-owned companies had been carried out.
“After submitting this review to the Supreme Council for Economic Affairs and Investment, I have directed that subsidies for a number of these companies be ceased, and some to be privatised, and management of some be transferred to the private sector, and government corporations and companies not to compete with the private sector, and opportunities for this sector to implement government projects be enforced.”
But the private sector in Qatar must assume its responsibilities and take the initiative too, and not to wait for the state to be a patron. The patron state caters forincapable citizens, children and the elderly. In addition to that, Qatar has been ranked first in the world in spending to subsidise consumer products, but when it comes to business, it must not be a patron state of business. Because that is an area of private initiative.
The Emir said that the state must strengthen the business sectors by arranging investment conditions, eliminating bureaucratic bottlenecks and preparing an incubating infrastructure for the projects. But the rest depended on the business sector itself, he said.
In addition, this sector was supposed to be more than just an intermediary between the state and foreign companies, he said “Surely, foreign companies are indispensable, but we want to see the domestic capital contribution, its initiatives and willingness to take risks in developing the national economy in order to make profit.”
HH the Emir said that the state undertook vigorous efforts for developing economic zones, logistics, and storage facilities. Two industrial zones have been launched during 2014 and 2015.
The government continued to put forward projects for tender to increase storage capacity and reduce operational costs for investors.
“This does not solve the whole problem as we must also address the unjustified rise in real estate prices. Everyone knows that high operational costs in all areas would eventually reach the state and inflate its budget. This is no longer possible.”
The Emir stressed that it was necessary to remove the bureaucratic obstacles encountering investment, especially some procedures that had turned into mere stumbling blocks hindering work.
This also applied to some duplication among the ministries, and frequent changes in the procedures, transactions, requested forms and licences, which tended to confuse citizens, as well as local and foreign investors, he said.
Many would not venture to invest if the investor was requested every day to fill out a new form, a new licence; or if several conditions were changed many times during the submission of the application, he said. It was necessary to standardise as much as possible the procedures at ministries, for the citizen and the investor by means of one-stop shop concept.
“This idea must find its way through to be implemented in a comprehensive manner. Surely, there is no investment without conditions. However, the conditions and procedures in our country must be clear, complex free and stable,” the Emir said.
“I have directed the government to hammer out a strategy to increase the contribution of manufacturing industry to GDP, particularly, those based on knowledge. It is necessary for Qatar to produce at least part of its food. I hope that these plans will find their way into implementation,” the Emir said.
“I would like to take a short pause to address the Qatari youth, Qatar’s economy cannot dispense with foreign expertise and labour, this is true, yet Qatar cannot be built without you. It cannot be built on a limited number of professions and specialties that are pursued by all.
“There is a complete and vital sectors of the state such as the field of security, army and police, and even planning, management, engineering, medicine and scientific research, where we need Qatari youth, and Qatari youth must turn to all specialties and take their homeland into account when taking decisions.”
Citizenship, he said, was not a set of privileges, but first and foremost was a sense of belonging to the homeland. This affiliation entailed a set of rights and duties towards the society and the state. Citizenship is also a responsibility, the Emir underlined.
“A citizen has the right to benefit from the wealth of his country. But the citizen must ask himself from time to time, what did I give for my country and my community? What are the best ways to be useful?
“And what can I do to contribute to the national wealth of my country so that future generations can also benefit. This is what we mean when we say that the real wealth of nations is the human resource and the real source of its poverty is also the human resource. Thus, countries differ from each other,” the Emir said.
“I also affirm here before you that if this is what expected from the citizen, then what is expected from anyone in a public position is much more than that. In this sense, we will not tolerate financial and administrative corruption, or abuse of public positions for private purposes, or abandoning professional standards for a personal interest,” the Emir said.
“Our pursuit for economic diversification and reducing the dependence on oil and gas does not mean that we will not pay adequate attention to maintain and develop this sector, because this sector has enabled us to achieve growth rates during a period of 15 years, which are among the highest growth rates in the world, and this growth is the one that helped to achieve qualitative leaps in all economic, human and social fields, and it will remain for a long time a major component of the GDP and a source of wealth used to expand the production base for future generations.”
On foreign policy, the Emir said that Qatar continued its effective collective and bilateral work in various Gulf, Arab, Islamic and international frameworks.
“I emphasise here on continuing our efforts with our brothers in the Gulf Co-operation Council (GCC) to strengthen our collaboration at all political, economic, social, and security levels and on developing the council’s action mechanisms so as to be able to face the regional and global challenges and changes and to achieve the interests of our people. We are also most keen to strengthen the fraternal relations with all brotherly Arab countries which are desperately in need of unifying their ranks and positions and to deepen co-operation to cope with the risks and challenges they encounter.”
To the same extent, the Emir said that Qatar paid great attention to defending Arab and Islamic causes, achieving international peace and security, adhering to international legitimacy and building friendly relations that respect common interests with the countries of the world and which are based on mutual respect and non-interference in internal affairs.
“In these days in which we witness the uprising of the Palestinian people to defend themselves against the practices of the occupation and protect the sanctities of the Arab and Islamic Umma as a whole, and the legendary steadfastness of the Syrian people in defending their right to a decent life in their homeland, I reiterate our commitment to these just causes and to our principles vis-a-vis all Arab issues,” the Emir said.
“Everyone has become aware that Qatar does not change its principles. We may conduct an introspection and evaluate our actions in order to correct errors if they occurred, because only God does not make an error, but we do not change our principles.”
