Qatar State Spending Up 13% In Last Fiscal Year, Slowest In 11 Years

Qatar’s state spending increased 12.7 per cent last fiscal year, the lowest rate in 11 years, as slow growth in current expenditure offset a sharp rise in funds spent on infrastructure projects, data showed on Sunday.

Expenditure rose to a record high of QAR231.7 billion ($63.6 billion) in the year that ended in March, from QAR205.6 billion in 2012/13, preliminary finance ministry data released by the central bank showed.

Last year’s spending was 10 per cent more than initially planned. But the margin by which actual spending overshot the plan was the lowest in five years, suggesting the government has begun reining in excesses of the previous four years, when on average it spent almost a quarter more than originally planned.

Doha also seems to have accelerated work on infrastructure projects worth roughly $210 billion that it plans over the next decade or so, many of them related to Qatar’s hosting of the 2022 soccer World Cup.

Project spending soared 32.7 per cent to QAR68.4 billion last fiscal year, compared with growth of just 1.9 per cent in the previous year.

Difficulties in planning and logistics, as well as bureaucratic obstacles, delayed project spending in the past. Qatar has now scaled down or divided into phases some big-ticket projects, such as a metro, a port and airport facilities, to reduce economic overcapacity risks.

Current expenditure rose six per cent to QAR163.2 billion in 2013/14, a sharp slowdown from a 24.4 per cent jump in each of the previous two years, because of a drop in interest payments and spending on supplies and services. However, public sector wages kept rising strongly.

State revenue in the world’s top liquefied natural gas exporter grew 21.9 per cent to a record QAR346.6 billion last fiscal year, slower than the 27.8 per cent rise in the previous year.

Revenue growth would have slowed further if Qatar Petroleum had not started transferring its entire financial surplus to the government from 2013. Previously, a part went to the government as investment income, part was retained on the company’s balance sheet, and part was used to provide fresh capital to the Qatar Investment Authority.

The 2013/14 budget surplus surged to a record QAR115 billion, or 15.6 per cent of gross domestic product, from QAR78.8 billion or 11.4 per cent of GDP in the previous year.

Analysts polled by Reuters in April forecast Qatar’s fiscal surplus would total 7.7 per cent of GDP in 2014/15, shrinking to 5.2 per cent in the coming fiscal year.

Soaring government spending, combined with flat production of LNG, falling crude oil output from mature fields and lower hydrocarbon prices, may push Qatar’s fiscal balance into deficit over the medium term, the International Monetary Fund warned in March.