Qatar warns of deficits and delays in work on infrastructure
Agence France Presse
DOHA: A $200 billion infrastructure program launched by Qatar could see higher costs and delays because of the slump in oil prices, the government of the 2022 football World Cup host warned Sunday.
A study from the Development Planning and Statistics Ministry said that “continued volatility” on the oil market was likely to have consequences for the construction projects underway in the Gulf emirate.
The MDPS predicted that Doha would run budget deficits for at least three years as it adjusts its energy-reliant economy to the fall in oil prices, which have dropped by more half since 2014.
It also confirmed that Qatar would for the first time introduce a value-added tax in 2018, in the form of a 5-percent levy on certain goods that was agreed by Gulf Cooperation Council finance ministers this month. “Most risks to the outlook are grounded in international oil price movements,” it said in its “Qatar Economic Outlook” study.
“If they [oil prices] remain low for an extended period, the fiscal and external accounts deficit will be more pronounced requiring funding efforts.” It added that risks included “delays or cost overruns [or both] in the delivery of key infrastructure reforms.”
Qatar is a member of OPEC and the world’s biggest exporter of liquified natural gas.
Among the major infrastructure projects being built are Doha New Port, a metro system and regeneration of parts of the capital.
The World Cup is expected to cost about $30 billion, with stadiums accounting for $10 billion of that, organizers have said.
The MDPS said Doha will run a budget deficit of 7.8 percent this year, Qatar’s first in 15 years.
This will increase to 7.9 percent in 2017 and fall to 4.2 percent the next year, it predicted.
Qatar’s economy is expected to continue to expand, but growth will slow – from 3.9 percent this year to 3.2 in 2018, the MDPS predicted.
A version of this article appeared in the print edition of The Daily Star on June 20, 2016, on page 15.