Qatar Comfortable With Current Oil Prices As Fiscal Pressure Drops

Higher oil prices since the OPEC deal have eased some of the burden on Qatar, whose government may not issue international debt this year, finance minister Ali Sherif al-Emadi said on Tuesday.

“We may not issue a bond this year given where oil prices are - right now we are close to break-even,” Reuters quoted Emadi as saying at a briefing.

Qatar – which ran a rare budget deficit in 2016 due to the low oil prices – expects the deficit to drop this year. The 2017 budget has pegged oil prices at around US$45, and seeing where oil prices are now, the deficit this year may be close to zero, Emadi noted.

Nevertheless, Qatar will continue to lower government spending and reduce government operating expenses, the minister added.

In order to keep strict fiscal discipline, Qatar would not be drawing down its sovereign wealth fund to finance its deficit, the minister said.

Qatar is spending around US$500 million weekly on capital projects, and it is investing heavily in preparations to host the 2022 World Cup.

The minister sees the economy of the world’s largest LNG exporter growing by between 3.4 percent and 3.5 percent in 2017.

In its latest mission assessment, the International Monetary Fund (IMF) also expects Qatar’s GDP growth at 3.4 percent this year, on the back of expansion in the non-hydrocarbon sector due to World Cup-related spending and supported by additional output from the new Barzan gas project.

Related: Saudis To Raise $10 Billion Ahead Of Aramco IPO

Unlike many other oil and gas exporters, Qatar financed its fiscal deficit mostly via domestic and foreign borrowing without using its sovereign wealth fund. Qatar has already raised a total of US$14.5 billion of external debt and issued US$2.6 billion of domestic bonds and Islamic bonds, or sukuk, the IMF said.

In a sign that Qatar is looking to seize growth opportunities, Qatar’s state-run flagship company Qatar Petroleum seeks to grow its LNG production and reserves outside Qatar, according to CEO Saad al-Kaabi.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• UAE Starts Execution Of $163 Billion Energy Transformation
• ‘Good’ OPEC Compliance Pushes Oil Prices Higher
• Trumps Military Plans Could Send Cobalt Prices Sky High