QCB maintains price and financial stability, inflation moderates and banks remain healthy: IMF

The Qatar Central Bank (QCB) has maintained price and financial stability as inflation "moderated", while banks remain "healthy", according to the International Monetary Fund (IMF)."The QCB has maintained price and financial stability. Inflation has moderated following monetary policy tightening in tandem with the US Federal Reserve, consistent with the currency peg to the US dollar," IMF said in its Article IV consultation report on the country.The IMF team, led by Ran Bi, had met with Minister of Finance HE Ali bin Ahmed al-Kuwari; QCB Governor HE Sheikh Bandar bin Mohamed bin Saoud al-Thani, other senior government officials, and private sector representatives during the first fortnight of this month.Reiterating that the QCB’s prudent policies have underpinned financial stability; it said continued diligence is "critical" to maintain banking sector strength in a "higher-for-longer” interest rate environment.The QCB has increased the repurchase rate by 500 basis points since the beginning of 2022 to 6% in July 2023. Since January 2022, repo rate has risen from 1% to 1.25% in March, 1.75% in May, 2.5% in June, 3.25% in July, 4% in September, 4.75% in November, 5.25% in December, 5.5% in March, 5.75% in May 2023 and the 6% in July. In 2022, the average repo rate was 2.77%.On the consumer price index inflation, the IMF report said it will "likely moderate to 2%”.According to the latest data of the Planning and Statistics Authority, higher expenses towards communication, recreation and food led Qatar's general inflation to rise 2.52% year-on-year in October 2023.The IMF report said Qatar's banks remain "healthy", although the non-performing loan ratio has edged up as pandemic-related restructured loans have turned non-performing, output growth has normalised after the World Cup, and financial conditions have tightened."Banks’ relatively high provisioning mitigates the risks," it however said.The QCB has refined macro-prudential measures to further reduce risks associated with banks’ external asset-liability mismatches, especially those of short maturities, which is welcome, according to the report."Continued diligence is critical to enhance banking sector resilience, complemented by reforms to further deepen domestic financial markets, as envisaged in the upcoming financial sector strategy," it said.