Qatar Budget Surplus to Rise in 2022 on Higher Oil, Gas Revenues

Qatar’s budget surplus is expected to rise to about 6% of GDP in 2022, due to higher oil and gas revenues, Oxford Economics has said in a report.

While the country’s budget moved into deficit in 2017, this was temporary and returned to surplus in 2018. However, it began to narrow again in 2019 and, given the slump in oil and gas prices, it moved into deficit of 2.1% of GDP in 2020, Oxford Economics said in its latest ‘Country economic forecast’.

Qatar’s 2022 budget is based on a conservative oil price estimate of US$55 per barrel, well below the researcher’s forecast of US$71 next year.

“On this basis, the authorities project a slight deficit of QR8.3 billion (US$2.26 billion), or roughly 1% of GDP next year, while we see a surplus of close to 6%, with higher revenues facilitating an increase in spending,” Oxford Economics said.

In terms of the country’s balance of payments, the report said that while the external debt burden became large due to heavy investment in a relatively short period of time, it then fell markedly as a ratio to GDP, before picking up again since 2015 as the oil price plummeted.

But it is not seen as particularly worrying given the large but undeclared foreign assets (including some US$37 billion of official reserves as at late 2017), the sustained current account surpluses (until 2016), rapid economic growth and access to cheap external borrowing thanks to its high, albeit falling, sovereign credit ratings, the report said.

The country’s large external surpluses have been invested abroad in property, financial, retail and other sectors by the Qatar Investment Authority (QIA), which is estimated by the Sovereign Wealth Fund Institute to have assets of over US$300 billion, and the aim is to reduce the state’s reliance on oil and gas earnings.

Giving a background on the structure of the country’s economy, Oxford Economics noted Qatar's fiscal surplus was some 15.5% of GDP in 2013/14 and the current account surplus has typically been some 15-30% of GDP in recent years until the downturn in the oil price.

While oil production capacity continued to increase, it was the investment in two LNG projects (Qatargas and RasGas) that changed the country’s fortunes, backed by the largest non-associated gas field in the world and the second highest proven gas reserves in the Middle East after Iran.

Qatar remains the world’s largest LNG exporter. There is also heavy investment in gas-to-liquids, petrochemicals, gas export pipeline, infrastructure and tourism.

Some US$200 billion is being spent on infrastructure between 2015 and 2020, partly related to the 2022 football World Cup and partly related to an expanding population and the country’s long-term strategy, Qatar National Vision 2030.

In addition, Qatar is developing into a significant regional financial and educational center, Oxford Economics said.