Qatar's budget surplus seen widening this year on expected higher energy prices

Qatar’s budget surplus is expected to widen to 12% of GDP in 2023 on the assumption that oil and gas prices will remain high, an analysis has shown.Last year, according to an Emirates NBD estimate, Qatar's budget surplus may have widened to over 10% of GDP. The regional banking group sees the budget surplus widening to 12% of GDP this year.Qatar’s budget has benefited from the surge in oil and natural gas prices in 2022, with oil and gas revenues up 67% year-on-year (y-o-y) in the first half of 2022, Emirates NBD said recently.Other revenues have also increased sharply in 2022, with top line revenue up 58% y-o-y in H1. Expenditure growth has been more restrained at 13% y-o-y, focused on capital spending projects. Current spending and wages and salaries have increased 11-12% y-o-y in H1, 2022.According to the Ministry of Finance, the budget for fiscal 2023 estimated a surplus of QR29bn. The budget has set spending at QR199bn with total revenue of QR228bn next year.Qatar’s oil revenue is expected to be QR186bn and non-oil revenue QR42bn this year.Higher revenue projected for 2023 (QR228bn) has been mainly due to the adoption of an average oil price of $65 per barrel for fiscal 2023 in place of $55 per barrel in 2022.Higher budget surplus in the first three quarters of 2022 denotes favourable oil and gas prices, which clearly helps Qatar to manage its assets and debts quite remarkably.Recent data from the Ministry of Finance showed Qatar’s financial surplus exceeded QR77bn in the first nine months of 2022 compared to QR4.9bn during the period in 2021.Revenues during the first nine months of 2022 reached QR232.6bn, with QR193.9bn coming from oil and gas, and QR38.6bn from non-oil revenues, exceeding the 2021 total revenue of QR193.7bn.Thrice in the last 10 years, Qatar achieved similarly huge surpluses: 2012 (QR77bn), 2013 (QR106.3bn), and 2014 (QR108.6bn).According to QNB Economics, crude oil prices could see a further upside, as the bank expects physical markets to tighten further on the back of supply constraints and stronger global demand.QNB expects prices to be well supported in a range of between $90 and $115 per barrel over the coming quarters."On the demand side, after several quarters of negative economic growth de-ratings by analysts and international organisations, there is now scope for a more positive outlook. In fact, we expect stronger than previously anticipated economic growth in all major economies over the next couple of quarters, including in the US, Europe and China,” QNB Economics said in a recent report.Recently, researcher FocusEconomics noted Qatar’s public debt will decline over the next three years from 39.9% this year to 38.7% of GDP in 2026.Next year, the country’s public debt has been estimated to be 40.8% and 39.7% in 2025.