Qatar Finance Minister: Next FY budget won’t expand much

Qatar Finance Minister: Next FY budget won’t expand much

Qatar's state budget for next fiscal year will be roughly the same size as the current year's budget, finance and economy minister Youssef Kamal said on Monday.

March 12, 2012 1:44 by Reuters

“It will be the same size as the prevailing budget, maybe a little increase,” he told reporters.

Previously, an economic adviser to the country’s emir had said last month that budget spending for the 2012/13 fiscal year, which starts on April 1, would be much higher than in the current year. Kamal did not explain the contradictory statements or give details.

Last week, Qatar’s state news agency, citing a decision by the cabinet, reported that the deadline for releasing the state budget for the coming fiscal year would be pushed back to the end of May because of changes to the government’s accounting system and the way it prepares budgets. The annual budget is usually announced by April 1.

In its 2011/12 budget, the world’s top liquefied natural gas exporter originally planned spending worth 139.9 billion riyals ($38.4 billion) and a surplus of 22.5 billion riyals, or 4.9 percent of gross domestic product.

Partly in response to political unrest elsewhere in the Middle East, Qatar hiked basic salaries and social benefits for the state’s civilian employees by 60 percent last September, while military staff received 50-120 percent rises. The International Monetary Fund estimated such extra social spending would add $1.6 billion to expenditure in 2011/12.

DEBT
Kamal said government revenues were quite sufficient to cover its budget, but that would not preclude debt issues by the government this calendar year.

“Last year we were on the market — we issued some bonds internationally and locally. Revenue for the state exceeds the budget but that doesn’t mean we don’t have a plan to be on the market once or twice a year,” he said.

“We want to create a yield and give a benchmark to other institutions. Government issuance last year helped create a benchmark for QNB (Qatar National Bank) and Doha Bank.”

In January last year, the government sold 50 billion riyals worth of domestic bonds; it issued $5 billion of bonds internationally last November.

Kamal reiterated previous statements by government officials that inflation was expected to be between 3 and 3.5 percent this calendar year.

The government is not concerned about controlling inflation, partly because debt issues can be used to limit inflationary pressure, he said. Economists believe last year’s domestic issues of domestic government bonds and Treasury bills were intended partly to limit inflation by draining excess funds from the banking system.