Projected revenues for the 2016 financial year are QR 156 billion, substantially down from the QR 225.7 bn the previous year. The decline in revenues is due to a reduction in oil price assumption to USD 48 per barrel, compared to USD 65 per barrel in the previous financial year.
The budget has been endorsed by the Emir, H H Sheikh Tamim bin Hamad Al Thani, and will come into effect from 1 January, 2016. Al Emadi stressed the budget demonstrates the government’s keenness to continue implementation of its sustainable development programme with a focus on major projects in health, education and infrastructure. This is in addition to projects related to the hosting of the FIFA World Cup in 2022.
Al Emadi said the budget is in line with directives issued by the Emir, to achieve efficiency in current expenditure and maintain allocations to major projects. Accordingly, allocations for salaries and wages in the 2016 fiscal year are QR 49.5 bn, compared to QR 47.5 bn in the previous budget.
Allocations for current expenditure, are QR 58.5 bn compared with QR 71.2 bn. Allocations for minor capex are QR 3.7 bn compared with QR 12.2 bn, previously.
Allocations for major projects in the 2016 budget have increased by QR 3.3 bn to QR 90.8 bn, compared with QR 87.5 bn the previous fiscal year. Allocations for health, education and infrastructure are QR 90.9 bn, representing 45.4 percent of the total expenditure in the 2016 budget.
The minister said the preparation of the 2106 budget focused on achieving a balance between revenues and expenditure to enhance financial stability and economic growth in the country, taking into consideration that oil and gas production are at stable levels, while the non-oil sector is leading economic growth, at an estimated rate of 9.5 percent in 2015.
The government has adopted measures to support growth in the non-oil economy and encourage the private sector in expanding its contribution to economic growth and the overall sustainable development programme. This will enhance public revenues from non-oil sectors during the coming period.
Avoiding negative impact
Al Emadi said that reductions in expenditure focused on avoiding any negative impact on nationals and maintaining the quality of services of government institutions. “The current situation provides an opportunity to achieve further efficiency, especially in operating costs of various government departments, which represent a large stake of the total public expenditure,” he said.
“The total cost of government projects that are currently underway is QR 261 bn, excluding projects in the energy sector or those being implemented by the private sector. This includes QR 87 bn in transportation, QR 54 bn in other infrastructure, QR 24 bn in sports and QR 30 bn in water and electricity. There are also projects in the education sector totalling QR 17 bn and in the health sector worth QR 7 bn,” the minister said.
Qatar is continuing to enhance spending on key sectors, especially education, as funds allocated to the sector have increased to QR 20.4 bn. These funds aimed to ensure the implementation of the strategic plan for the sector.
It includes new expansions at Qatar Foundation for education, science and community development and at Qatar University, including a new hostel, students’ affairs building and campuses for the faculties of engineering, education, law, medicine and medical sciences, in addition to a laboratory for the Faculty of Sciences.
Other education projects include the establishment of 18 new schools and 6 kindergartens planned during 2016.
Funds allocated to the healthcare sector are QR 20.9 bn, with the aim of implementing a set of advanced strategic programmes to achieve high standards. There is a special focus on boosting health projects as funds were allocated for the Sidra Medical and Research Center, along with the completion of Hamad General Hospital and Hamad Medical City.
Also, more than QR 850 mn has been allocated for the establishment of five new health centres, in addition to funds for the establishment of the Cancer Treatment Centre, Specialised Clinics Centre, Biomedical Research Centre and premises for emergency medical services and other health projects.
Allocations to infrastructure projects total QR 50.6 bn in the 2016 budget, representing 25 percent of expenditure. Funds were allocated to rail projects and New Doha Port, along with a large number of road projects including the new Al Rayyan road, new Al Khor road and the development of Fifth Ring Road in Doha.
Al Emadi added that the projects included the development of infrastructure in the Doha Industrial Area and the completion of expansions in the water, electricity and sewerage networks in various areas to keep up with the population growth in urban areas.
The budget includes funding for housing loans worth QR 2 bn through Qatar Development Bank, representing a 25 percent increase from QR 1.6 bn in 2015. There have been around 6,000 beneficiaries of housing loans since 2013.
Funds have been allocated for the development of a large number of land plots, which includes the establishment of infrastructure and utilities for around 3,700 plots in different areas in the country to be distributed to nationals. Construction is underway for the development of a total area of around 4.4 million sq. metres and is expected to be finalised in Q1, 2017.
Al Emadi stated the budget deficit would be financed through issuing debt instruments in local and international financial markets. He added that Qatar has accumulated strong financial reserves at Qatar Central Bank (QCB) and has made sizable investments through the Qatar Investment Authority (QIA) during the period of high oil and gas revenues.
“Qatar will maintain these reserves and investments. The 2016 budget does not include any income from the reserves at QCB or investments of QIA, as this is being reinvested to boost the country’s reserves and investments in order to further enhance Qatar’s financial position,” the minister said.