Qatar

Fiscal reserves are solid but an elevated public debt level requires monitoring. Qatar’s fiscal breakeven point has ranged between 35 and 55 USD/bbl crude oil over the past decade. Hence the government has recorded large annual fiscal surpluses in most years, except for 2016-2017 when oil and gas prices had been persistently low for some time. Even in 2020 a small surplus of +1.3% of GDP was achieved. The surplus widened to around +4.4% in 2021 and we estimate it to have increased to more than 10% in 2022, thanks to surging gas prices. We project continued robust surpluses close to 10% of GDP in 2023-2024. Meanwhile, public debt rose from 25% of GDP in 2014 to 73% in 2020, in part due to declining nominal GDP. However, the debt-to-GDP ratio eventually declined to 58% in 2021 and we expect it to fall further over 2022-2024 in the wake of the economic recovery. Yet we forecast the ratio to remain elevated and it should be monitored closely. Overall, however, Qatar will remain a large net external creditor, thanks to the huge foreign-asset position in the Qatar Investment Authority (QIA, a sovereign wealth fund currently estimated at approximately USD475bn).

External liquidity will remain unproblematic in the next two years. Qatar has recorded large, sometimes huge annual current account surpluses for more than two decades, with the exceptions of 2016 and 2020 when global oil and gas prices were particularly low. These surpluses have contributed to the build-up of the QIA. Higher oil and gas prices moved the current account back into a surplus of nearly +15% of GDP in 2021 and more than 20% in 2022. That ratio is likely to narrow somewhat in 2023-2024 but should remain well in the double digits. Meanwhile, external debt is relatively high; it rose to 126% of GDP in 2020, incurred by oil and gas investments since the 2000s, but repayment obligations are unlikely to present liquidity problems. Meanwhile, the ratio is estimated to have fallen to approximately 84% in 2022 and should decline further. The annual debt-service-to-export-earnings ratio is forecast at a manageable 16% or so in 2023. Financial resources will remain strong. The combined FX reserves of the central bank and the QIA represent over 200% of annual GDP and cover more than 80 months of imports.