Press Release No. 24/448

IMF Staff Completes 2024 Article IV Mission to Qatar

December 2, 2024

• Qatar’s economy has shown signs of a gradual rebound from the post-World Cup growth moderation. Near-term real GDP growth is expected to reach 2 percent, and the medium-term outlook is more favorable, supported by the significant Liquified Natural Gas (LNG) production expansion and intensified structural reforms.
• Broad fiscal prudence and progress in strengthening fiscal institutions in recent years are commendable. Sustaining fiscal discipline and accelerating revenue and expenditure reforms, underpinned by a medium-term fiscal framework, would help ensure fiscal sustainability and support economic transformation.
• The Qatar Central Bank (QCB)’s diligent policies have helped to safeguard banking sector stability. Continued vigilance to address pockets of vulnerabilities is important. Maintaining the momentum in deepening domestic financial market is also crucial, guided by the Third Financial Sector Strategy.
• Strong reform momentum following the launch of the Third National Development Strategy (NDS3) should continue to build a knowledge-based, private sector-led, and sustainable economy.

Washington, DC: An International Monetary Fund (IMF) staff team, led by Ms. Ran Bi, visited Doha during November 10–21, 2024 to conduct discussions for the 2024 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 2025.  

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

“Following the post-World Cup growth moderation in 2023, Qatar’s economy has shown signs of a gradual rebound. Real GDP growth declined from 4.2 percent in 2022 to 1.2 percent in 2023, mainly due to contracting construction activities and moderating services growth after the 2022 FIFA World Cup. Tourism, on the other hand, strengthened significantly since the World Cup. Recent high frequency indicators and labor market development point to gradual growth strengthening in 2024. The 2024-25 real GDP growth is expected to reach 2 percent, supported by public investment, spillovers from the ongoing LNG expansion project, and strong tourism. The medium-term outlook is more favorable, with the average annual growth projected to be around 4¾ percent, benefitting from the significant LNG production expansion and NDS3 reform implementation. Following the earlier monetary policy tightening, headline inflation is likely to ease to 1 percent in 2024 and gradually converge to 2 percent. The fiscal and current accounts are projected to remain in surpluses over the medium term. Risks to the outlook are broadly balanced.   

“While some fiscal space was deployed to support the slowing economy in 2023, the fiscal stance remained consistent with the level that ensures intergenerational equity. Continued fiscal discipline is expected for 2024, and broadly prudent spending plans are envisaged under the upcoming 2025 budget. The extension of the medium-term budget to cover five years and progress in implementing program-based budgeting are commendable. The positive economic outlook provides an opportunity to accelerate revenue diversification especially to introduce a value-added tax, enhance spending efficiency and gradually align domestic and export energy prices, and reorient public spending to facilitate private sector growth. Adopting a full-fledged medium-term fiscal framework, with a fiscal anchor to ensure intergenerational equity and complemented by greater transparency and risk management, will enhance fiscal sustainability and support economic transformation.  

“The Qatar Central Bank (QCB) has broadly maintained the monetary policy in line with the U.S. Federal Reserve, consistent with the currency peg to the U.S. dollar. Its progress in enhancing liquidity management is commendable, and continued efforts are important to further strengthen the effectiveness of the monetary operational framework. The banking sector remains healthy, thanks to robust buffers, diligent QCB supervision and ample hydrocarbon liquidity. Continued vigilance is important to ensure banking sector stability, including to manage banks’ net foreign liabilities (although their average maturity have lengthened and external funding sources have become more diversified), address asset quality concerns in some banks, and monitor the interconnectedness between banks and the public sector. Moreover, formalizing the financial safety net would further enhance predictability, efficiency, and confidence. Keeping the momentum in domestic financial market deepening is also important, guided by the Third Financial Sector Strategy. Qatar’s excellent progress in fighting financial crimes should continue.

“Achieving Qatar’s vision to shift from a state-led growth model to a more knowledge-based and private sector-driven one requires enhancing human capital and economic complexity. Strong reform momentum created by NDS3 is encouraging, and the success hinges on proper prioritization and enhanced inter-agency coordination in reform implementation. Priorities are to build a highly skilled labor force, foster innovation, promote trade diversification, FDI and domestic knowledge spillovers, and further enhance business efficiency. Qatar is well positioned to benefit from AI adoption and broader digitalization while due attention is needed to monitor their labor market impact. A concerted effort among stakeholders is critical to fulfill Qatar’s climate goals. Enhancing data availability and quality would support the path forward.

“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, other senior government officials, and private sector representatives.”