Qatar’s 2016 budget foresees ‘first deficit’ in 15 years: Samba

Qatar’s budget for 2016 foresees the “first deficit” in 15 years, coming in at 4.8% of GDP based on oil prices of $48 for a barrel, shows a new report.

The budgeted expenditures total QR202.5bn, which represents a 7.3% cut from the last full-year budget, said Samba Financial Group in a report.

The decline in projected revenues to QR156bn from QR225.7bn is due to a reduction in the oil price assumption from $65 in the previous budget, it said.

Qatar’s 2016 budget foresees ‘first deficit’

The Finance Minister reiterated this commitment to capital spending in the 2016 budget at the beginning of the year, saying that a ‘main goal’ during the budget preparation was to ‘ensure the completion and implementation’ of major projects in key sectors along with the projects related to the World Cup in 2022.

The budget now follows the calendar year, instead of running from April to March, as had been the case previously.

The announcement of a cut in spending on the previous budget and the recognition of a deficit is in line with the authorities’ “tougher stance” on recurrent fiscal spending, Samba said. “The authorities’ sense of urgency is vindicated by the latest fiscal figures, for the first three quarters of 2015, Government revenues have totalled QR159.7bn, whereas full-year revenue in 2014 stood at QR342.9bn,” the report said.

Although Samba still thinks that full-year 2015 figures will show a fiscal surplus, it sees a deficit of around 6% of GDP is in prospect in 2016. “There is already evidence of fiscal consolidation, the subsidy on petrol has been cut with prices rising 30%-35% in January,” Samba said.