World Economy

Rise in Oil Price Helps Cut Qatar’s Fiscal Deficit

The rise in crude oil prices and positive global outlook helped reduce Qatar’s fiscal deficit and increased surplus in the 2017 current account balance.

In addition, the country’s ambitious economic diversification strategy facilitated developments of non-hydrocarbon sectors and fostered resilience of the economy against the unjust blockade, Qatar Central Bank Governor Sheikh Abdulla bin Saoud Al Thani said, The Peninsula reported.

In his introductory note to QCB’s Financial Stability Review 2017 released Tuesday, the governor said the country’s economy quickly rebounded from the unjust economic blockade through relocation and realignment of economic activities, enabled by prudent economic policies and a sound financial system.

Inflation during 2017 remained benign and was one of the lowest among the six (Persian) Gulf Cooperation Council countries (United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait). Surplus current account balance and declining fiscal deficit even after sustained spending on infrastructure development reflects the strength of the Qatar economy, he said.

Qatar’s financial sector, in particular, the banking sector remained resilient, supported by sufficient capital buffers, low NPL ratio and healthy asset growth. With proactive support from the government and the central bank, the financial sector mitigated the challenges faced, after the economic blockade. The sector has since returned to ‘business as usual’ mode and regained the confidence of international investors, he said.

The broader financial sector continued to record a healthy growth, driven by insurance sector, QDB and exchange houses.

High capitalization and comfortable liquidity among these segments underscored latent capacity for future expansion and resilience towards successful situations. Evidence did not reflect any systemic risk to the payments and settlements system. The policy measures enacted during the year underscored the liquidity infrastructure.

Sheikh Abdulla said policies targeted to strengthen small and medium-sized enterprises sector and the thrust to complete the key infrastructure projects related to 2022 World Cup are expected to improve credit demand from both private and public sectors.

He said the banking sector is adequately capitalized to support this growing demand and the regulatory framework are equipped enough to overcome any macroeconomic challenges.

Add new comment

Read our comment policy before posting your viewpoints