Qatar’s plan to reorient spending to support knowledge-based growth could boost growth effects of fiscal spending and there is scope to further improve efficiency in spending, according to an International Monetary Fund (IMF) research paper.Finding that Qatar already has top-notch infrastructure (and excess supply in some areas) to help elevate growth potential; it said therefore, public investment should focus on improving human capital, both for nationals and expatriates; providing a more conducive environment for businesses; enhancing climate sustainability; and continuing to adapt to the energy transition.Investment in human capital (education and health) is a welcome key pillar of NDS3 or third national development strategy and there is scope to improve spending efficiency in Qatar, said the research paper ‘Estimating Fiscal Multiplier for Qatar’.Further investment in climate adaptation would mitigate its vulnerabilities to climate stressors, it said, adding more investment to facilitate decarbonisation and promote renewables would help Qatar reach its emission reduction target and smooth the energy transition process.Crowding in private sector investment with efficient public spending would further economic diversification and accelerate the transition to private sector-driven growth, according to the research paper. Finding that econometric results suggest that Qatar’s strong capital spending multiplier became less impactful as the stock of capital rose to a high level, likely as the marginal impact declined; it said this supports Qatar’s strategy to shifts the state’s role to an enabler of private sector-led growth, focusing on expenditure to support build human capital and implementation of broader reform guided by NDS3.Spending by Qatar has helped built the nation’s LNG (liquefied natural gas) production/export capacity and broader infrastructure, driving economic growth and diversification.In the early 1990s, the country developed a multi-directional and fast-track strategy to accelerate the commercialisation of Qatar’s substantial natural gas reserves to diversify and ultimately modernise the economy.Qatar has made large-scale investments across the entire value chain of LNG trains, tankers, and storage and receiving facilities, becoming one of the leading LNG producing countries in the world.To prepare for the 2022 FIFA World Cup and develop Qatar’s infrastructure more broadly, public sector expenditure on major infrastructure projects increased – top-notch infrastructure has been built including the Lusail real estate development, Hamad International Airport, Hamad Port, the Doha Metro and other transportation and social infrastructure.Long-term contributions of such spending were significant – the large investment in general infrastructure ahead of the World Cup is estimated to have driven much of the non-hydrocarbon sector’s growth in the past decade. Qatar is in the process of reducing its footprint and enabling private sector development, the research paper said, adding the private sector historically played a limited role, according to the study. The country has undertaken regulatory reforms to support firm creation, competition, and FDI or foreign direct investment. The telecommunications sector was liberalised, and special economic zones were created. In recent years, the responsibility for certain projects in the real estate, education and healthcare sectors was outsourced to the private sector.QatarEnergy had launched a programme to increase localisation of the energy sector’s supply chain by creating local support services and industries, including SMEs or small and medium enterprises. New legislation on public-private partnerships facilitates the financing of new schools, medical centres and other infrastructure projects by the private sector.The NDS3 was released in January 2024 to intensify transition to private sector-driven growth. The state is set to become an enabler to facilitate this transition, using public spending to support NDS3 reforms.