Qatar’s capabilities to withstand macroeconomic challenges from sustained lower hydrocarbon prices have been endorsed by the International Monetary Fund (IMF) in its assessment of the country’s economy recently.
IMF expects Qatar’s real economic growth to be 3.4% this year. And given Qatar’s substantial financial buffers, the country, which accounts for one-third of global liquefied natural gas (LNG) trade, is well positioned to mitigate the macroeconomic challenges from sustained lower hydrocarbon prices, the Washington-based global monetary body noted.
Hailing Qatar’s responsiveness to adjust to lower energy prices, it urged the country to sustain its sound policies, which would help strengthen the fiscal position, maintain financial stability, and promote more diversified and sustainable growth.
Due to Qatar’s large buffers, IMF noted there is space to pursue fiscal consolidation at a gradual pace over the medium term to ensure intergenerational equity of Qatar’s exhaustible hydrocarbon wealth, supporting the ongoing and envisaged revenue and expenditure measures, including subsidy reforms, containment of public-service benefits, lower spending on goods and services, and the introduction of a value added tax and excise taxes.
According to IMF, the decision of the Gulf Co-operation Council to implement value-added tax (VAT) from early 2018 will benefit Qatar and the other GCC countries. Revenue from value-added tax (VAT) at a rate of 5% could help Qatar generate additional revenue of about 1.5 percentage points of non-hydrocarbon GDP a year.
Qatar has already taken actions to ensure its smooth and timely implementation. These include establishing a separate and independent tax authority, and recruiting experts to help with the design and implementation of the VAT.
Another decision by Qatar to levy excise duty on tobacco and sugary drinks measure is estimated to yield about 0.2% of non-hydrocarbon GDP in revenue. This is in line with a GCC-wide agreement.
Economists have already indicated that there was “room for increasing and broadening” the base of existing taxes in Qatar, especially the corporate income tax. 
There is also room for further increases in domestic fuel prices, they argue, as Qatar’s fuel and gas prices remain low compared to international prices.
The report highlighted Qatar’s ongoing budget reforms and emphasised the importance of rooting fiscal efforts in a medium-term fiscal framework. 
Highlighting the progress being made in strengthening the medium-term budget framework, including the establishment of a Macro-Fiscal Unit within the Ministry of Finance, IMF noted these initiatives will ensure that budget execution is in line with the budget.
On the expenditure side, controlling public service benefits and spending on goods and services, while preserving key public investment projects, would contribute to reducing total public spending by 13 percentage points of non-hydrocarbon GDP by 2021, with some impact on growth.
Some of these proposed measures have already been incorporated in the 2017 budget, including the on-going rationalisation of current expenditure.
Another Qatari decision that has come for IMF’s praise is the country’s fixed exchange rate regime. Terming it appropriate; the monetary body said the peg to the dollar continues to serve Qatar well, simplify the macroeconomic policy and provide a credible anchor for its economic stability.