DOHA: Qatar is prioritising existing development projects in view of falling oil prices and plans to award about $220bn worth of large-scale investment projects over the next 10 years.
The investment programme will focus on infrastructure, education and health, says global credit rating agency Standard and Poor’s, affirming stable outlook ‘AA/A-1+’ ratings on Qatar.
In a report on Qatar released yesterday, S&P said: “We expect the majority of the projects to be completed ahead of World Cup soccer in 2022 Qatar is hosting.”
The programme will support medium-term real economic growth, although it will contribute to a deterioration in fiscal and external balances, exacerbated by large fall in oil prices, S&P said.
“The stable outlook reflects our view that Qatar’s economy will remain resilient, supported by strong macroeconomic fundamentals, although we anticipate continued institutional weaknesses and limited monetary flexibility over the next two years.”
S&P reiterated that it affirms its ‘AA’ long-term and ‘A-1+’ short-term foreign and local currency sovereign credit ratings on Qatar. “The outlook is stable.”
“We also affirmed ‘AA’ long-term issue ratings on the bonds issued by Qatari Diar Finance QSC and SoQ Sukuk A QSC.”
Giving rationale, S&P said cited Qatar as a wealthy economy and said it estimates the country’s per capita GDP (income) at $81,000 this year.
It, however, added that Qatar’s economy remained undiversified with hydrocarbons sector creating about 55 percent of its GDP and 90 percent of government revenues, and 85 percent of exports.
Qatar’s economy grew by about six percent over the past three years but growth is expected to slow down to four percent between 2015 and 2018. The hydrocarbon sector will likely continue to stagnate.
The non-oil sector should, on the other hand, remain buoyant, thanks to public investment and growing population.
S&P cautioned that Qatar’s external surpluses will narrow substantially in the medium term as export receipts fall sharply between now and 2016-end, while import demand remains strong.
The transfers and income accounts of the current account will remain in deficit, the former due to remittance outflows as a result of the expatriate population and the latter due to payments to foreign firms that partner with Qatari companies in the oil and gas industry.
Figures cited by S&P show that while Qatar’s nominal GDP has almost doubled from $98bn in 2009 to $191bn in 2015, per capita income (per capita GDP) has fallen over 2011, 2012, 2013 and 2014. It was $88,900 in 2011, $92,800 in 2012, $93,700 in 2013 and $93,400 last year, while $81,000 this year — due to rising population. The Peninsula
