Qatar may see higher public revenue, another fiscal surplus in 2022: EIU

Qatar may see its public revenue bolstered and another fiscal surplus in 2022 as a result of “mini-boom in commodities and high energy prices”, says EIU. In a recent overview EIU said Qatar’s macroeconomic indicators have improved since 2020, including a return to positive global and Qatari economic growth. Although the country’s “debt obligations are high”, its “ability to fully service them is not in doubt”, supported by ample foreign reserves and the assets of the Qatar Investment Authority (QIA, the sovereign wealth fund), EIU noted.The riyal's peg to the US dollar will continue to be backed by healthy foreign reserves and QIA assets, it said and noted the currency risk rating at ‘BBB’ (by EIU) is supported by a recovery in international hydrocarbons prices and a shift from deficit to surplus on the current account in 2021, as well as rebounding financing and liquidity metrics.According to EIU, the banking sector risk is BB-rated. The net negative foreign asset position of banks is large and growing. The sector is well regulated, and although net external liabilities pose risks, strong prudential indicators insulate banks from a deterioration in asset quality arising from the recession in 2020. The non-performing loan ratio is low, and profitability is moderate.The economic structure risk rating is also at BB (by EIU). Qatar's overdependence on hydrocarbons exports remains a vulnerability, however, leaving it exposed to international energy price movements. The Qatar National Vision 2030 diversification programme will shape policy. Qatar's large stock of public debt weighs on the outlook, but a sound financial system is supportive.In an earlier update, EIU said Qatar's overall business environment score has improved from 6.56 for the historical period (2016-20) to 7.35 for the forecast period (2021-2025). This has helped Qatar's global ranking to improve by eight places from 36th to 28th, although its regional ranking remains steady at third. The largest improvements, in terms of scores, are in the categories of infrastructure and market opportunities. “Qatar's fairly open foreign investment regime, open trading relationships with regional partners and sophisticated capital markets will remain strong aspects of its business environment,” EIU said.