Doha, Qatar – Qatar’s budget for the first nine months of 2022 revealed a significant financial surplus of over QR 77 billion ($1.36 billion), in contrast to the same period in 2021.
The surplus is mainly due to control over expenditures and the rise in revenues with the recovery in oil prices.
During the past few years, the budget figures showed some limited margin surplus in 2021 (QR 1.6 billion), 2019 (QR 7 billion), and 2018 (QR 15 billion); and a deficit in 2015 (QR 4.2 billion), 2020 (QR 10.4 billion), 2017 (QR 44.7 billion), and 2016 (QR 50.8 billion) – the biggest deficit in the last 10 years.
When approving the budget for 2022, the estimates showed a deficit of QR 8.3 billion, which the Minister of Finance Ali bin Ahmed Al Kuwari attributed to the operational expenditure (Opex) related to the FIFA World Cup hosting activities, including security and operational expenses for all activities related to the event
The data issued by the Ministry of Finance showed that the total budget revenues reached QR 232.6 billion, where QR 193.9 billion came from oil and gas, and QR 38.6 billion from non-oil activities – making it exceed the 2021 total revenue of QR 193.7 billion.
The data indicated that the total expenditures in the same period amounted to QR 155.2 billion, of which QR 47.5 billion were for salaries and wages, QR 51.2 billion for current expenses, QR 3.4 billion for incidental capital, and QR 53.1 billion for major projects.
The quarterly comparison of the 2022 actual budget data indicated an increase of 31.85 percent in revenues and 1.17 percent in expenditures in the second quarter compared to the first quarter.
The data also showed an increase of 26 percent in revenues and 0.78 percent in expenditures in the third quarter compared to the first quarter, while the comparison of the second and third quarters showed a 4.43 percent decrease in revenues and a 0.38 decline in the third quarter.
Professor of Economics at Qatar University, Dr. Rajab Al Ismail described the approach of benchmarking the oil prices in the State’s 2022 general budget and setting it at the level of $55 per barrel as positive. He said the approach is needed for the state to deal with worst case scenarios, as programming a lower price compared to circulated prices enables dealing with market fluctuations more wisely and secures financing of the budget’s various items.
Dr Ragab Ismail further said that a slight profit margin in the budget is much better than a deficit, which may lead to a lack of financial discipline that impacts projects and planned expenditures. Bigger the profit margin compared to the budget reference rates, more the progress in implementing the programmed plans and projects.
The 2022 general budget was based on $55 per oil barrel as an average price, given the remarkable recovery of energy prices in global markets. This approach aims to maintain the financial balance and limit the impact of oil price fluctuations on public finance performance.
Dr. Ragab Ismail explained that Qatar has invested surpluses from oil and gas revenues in the budget in safe investment channels such as government bonds, in addition to the contributions and shares acquired by the Qatar Investment Authority in major successful international companies. The revenues from them in turn feed the budget, in addition to directing these surpluses to pay off various liabilities such as debts, according to the assessments adopted in this field.
He expected that the 2023 budget would be built on a reference oil price estimated at $55, similar to the figure approved in the current year, especially in light of the prices in global markets, which fluctuated in the last period between $75 and $80.
He pointed out that fiscal policies aim to achieve stability and boost economic growth.
The 2022 budget estimated total spending at QR 204.3 billion, an increase of 4.9 percent over the 2021 budget. This increase in spending is mainly due to the temporary increase in operating expenses related to the activities of hosting the 2022 World Cup, as an amount of QR 74 billion has been allocated for major projects from the total expenditures of the general budget.
The economic analyst, Ahmed Aqel, said in a statement to Qater News Agency, that the surpluses that have been achieved during this year, so far, are very important, as they exceeded QR 77 billion, considering that the expectations of the International Monetary Fund at the beginning of this year were at QR 45 billion.”
He said that the reason for this large increase in surpluses, especially in the second quarter (more than QR 33 billion) and the third (QR 30 billion), is the difference between the reference price in the budget for 2022, which was very conservative at $55 a barrel, and the oil price, which amounted to more than $100 during the first nine months of 2022.
The infrastructure projects, the development of lands, and the development of public services such as health and education received priority spending in the the budget. The government also put more focus on the education and health sectors: Education received about QR 17.8 billion, which represents 8.7 percent of the total expenditure, and health sector got QR 20 billion.