Posted on October 11, 2015

The deep plunge in oil prices in recent times has been a cause of worry for countries dependent on hydrocarbon revenues across the GCC. In comparison with its regional neighbors, Qatar however, is in a strong position with substantial financial resources to withstand the near term decline in the price of oil.

Thanks to its visionary and forward thinking leadership, Qatar has built up sizeable financial reserves equal to about 140% of GDP, which should sustain the country for decades given current spending estimates. Qatar’s total government spending increased by 18% annually between 2004 and 2013, the fastest among the GCC and despite the recent oil price decline, the government has shown its commitment to proceed with capital spending plans as stated by HE Dr. Saleh bin Mohammed Al-Nabit, Minister of Development Planning and Statistics.

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His Excellency Ali Shareef Al-Emadi, Minister of Finance has confirmed Qatar will continue with its current pace of spending on major capital projects, particularly those related to health, education, infrastructure, transportation, rail and the FIFA World Cup 2022. In total, Qatar is set to award about $30bn worth of new contracts in 2016 and around $135bn worth of new contracts to be awarded between 2015 and 2020

Focusing on health and education, it is estimated Qatar will spend approximately QAR19 bn (USD5.2 bn) on healthcare this year, compared to QAR15.4bn in 2014. The miracle of education, spearheaded by Qatar Foundation that is transforming the sector, is also set to continue with the 2014-2015 financial plan including a promise to construct 85 new schools over the next year and a half. Going forward, we believe that education spending will rise further.

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To conclude, with government budget spending remaining robust, we expect Qatar’s remarkable growth to maintain momentum despite the hurdle of lower oil prices in the near term.

By Dr Abdulaziz A Al-Ghorairi (pictured) - Senior Vice-President and Chief Economist, Commercial Bank