Press Release No. 23/407

IMF Staff Completes 2023 Article IV Mission to Qatar

November 21, 2023

• Qatar’s economic growth has normalized in 2023 following the World Cup-driven boom. Continued normalization is expected in the near term, with a favorable medium-term outlook supported by the LNG production expansion and intensifying reform efforts.
• Broad fiscal discipline amid hydrocarbon windfalls in 2022-23 resulted in sizeable surpluses and rapid central government debt reduction. Sustained fiscal prudence, accelerated revenue diversification, and enhanced spending composition and efficiency should underpin the medium-term fiscal strategy.
• The QCB’s prudent policies have underpinned financial stability. Continued diligence is critical to maintain banking sector strength in a “higher-for-longer” interest rate environment.
• The upcoming Third National Development Strategy provides an opportunity to accelerate economic transformation toward a knowledge-based and inclusive economy supported by private-sector led growth.

Washington, DC: An International Monetary Fund (IMF) staff team, led by Ms. Ran Bi, visited Doha during November 1–14, 2023 to conduct discussions for the 2023 Article IV consultation. The mission will submit a report to IMF management and Executive Board, which is scheduled to discuss the Article IV Consultation in January 2024.

At the conclusion of the visit, Ms. Bi issued the following statement:

“After very strong performance in 2022, economic growth has been normalizing while the medium-term outlook remains favorable. Output is expected to expand by about 1¾ percent per annum during 2023–25 with the non-hydrocarbon sector growing at 2¾ percent driven by domestic demand, including from the construction of the North Field expansion project, and robust tourism, boosted by the global visibility brought by the 2022 FIFA World Cup. Medium-term growth is set to increase to around 5 percent per annum supported by LNG production expansion and as reform efforts to achieve National Vision 2030 guided by the Third National Development Strategy (NDS3) start to bear fruit. Inflation will likely moderate to 2 percent, and the fiscal and current accounts are projected to remain in surpluses over the medium term. Risks to the outlook are broadly balanced.

“Broad fiscal discipline amid sizeable hydrocarbon windfalls in 2022–23 has strengthened fiscal position significantly and is commendable. Continued fiscal prudence is expected under the upcoming 2024 budget. The next medium-term budget, covering 5 years for the first time, is being developed to support NDS3 initiatives and should balance aspiration for transformation and fiscal prudence. The ongoing effort to enhance efficiency, including through the implementation of program-based budgeting, and to increase transparency is welcome. Medium-term priorities include accelerating revenue diversification through further mobilization of non-hydrocarbon tax revenues, enhancing spending efficiency, and reorienting public investment to facilitate private sector growth, which can be supported by a well-functioning medium-term fiscal framework and greater fiscal transparency.

“The Qatar Central Bank (QCB) has maintained price and financial stability. Inflation has moderated following monetary policy tightening in tandem with the U.S. Federal Reserve, consistent with the currency peg to the U.S. dollar. Banks remain healthy, although the non-performing loan ratio has edged up as pandemic-related restructured loans have turned non-performing, output growth has normalized after the World Cup, and financial conditions have tightened. Banks’ relatively high provisioning mitigates the risks. The QCB has refined macroprudential measures to further reduce risks associated with banks’ external asset-liability mismatches, especially those of short maturities, which is welcome. Continued diligence is critical to enhance banking sector resilience, complemented by reforms to further deepen domestic financial markets, as envisaged in the upcoming financial sector strategy.

“Qatar is at an important juncture in shifting its growth model from one that is led by the state to a more dynamic and market-oriented one driven by the private sector. Building on the progress made so far, and guided by upcoming NDS3, reforms should focus on enhancing human capital, labor market dynamism, and business environment. Furthering digitalization with due attention to potential risks, and strengthening climate resilience and green transition are also key for achieving National Vision 2030.

“The staff team expresses its appreciation to the authorities for the productive discussions and for the arrangements to facilitate the visit. The team met with Minister of Finance H.E. Ali bin Ahmed Al Kuwari, Governor of the Qatar Central Bank H.E. Sheikh Bandar Bin Mohammed Bin Saoud Al-Thani, other senior government officials, and private sector representatives.”