DOHA: Qatar has been one of the fastest growing countries in the region and the near-term macroeconomic outlook remains strong, said a statement issued by managing director of the International Monetary Fund (IMF) Christine Lagarde on the occasion of her visit to Qatar.
Lagarde said that growth could accelerate this year and next, supported by a large public infrastructure programme, pointing out that the decline in oil and natural gas prices will substantially reduce external and fiscal surpluses, but its impact on growth will be softened in the near term due to the availability of Qatar’s sizeable financial buffers and continued public investments.
Lagarde also welcomed the recent steps by the ministry of finance to improve the budget process and formulate a fiscal consolidation strategy in the context of a medium-term framework are welcome. Given the strong starting financial position, the fiscal consolidation can be gradual so as to reduce the risk of adverse effects on economic activity, she added.
“Substantial progress has been made on enhancing financial sector regulation, including adopting the international regulatory framework for banks, Basel III. The banking system in Qatar is well-placed to weather lower oil prices, weaker nonhydrocarbon growth, and higher US interest rates,” she said.
The IMF chief said as hydrocarbon revenues decrease and external financing conditions tighten, the central bank will need to remain vigilant for pressures in the system and provide liquidity to the financial sector if needed. Further enhancements to the early warning system and addressing data gaps would facilitate a timely monitoring of risks, including from overheating in the real estate market, she said.
“Qatar has made important progress in diversifying its economy into non-hydrocarbon activities, and policymakers can support this process through additional structural reforms to further enhance the business environment,” she said.
Lagarde said that she met during her visit to Qatar with Emir H H Sheikh Tamim bin Hamad Al Thani, and described her talks with Prime Minister and Interior Minister H E Sheikh Abdullah bin Nasser bin Khalifa Al Thani, and number of ministers and senior officials as fruitful.
“We exchanged views on the important role Qatar plays in regional and global economic developments as well as the challenges and opportunities facing the region. I conveyed my appreciation for Qatar’s commitment to ensure that the IMF’s resources were sufficient to help IMF members in need.”
“My visit was a great opportunity to meet with students and youth leaders, members of the private sector, as well as some leading Qatari women. Our lively exchange of views at the Georgetown University School of Foreign Service gave me a better sense of the current situation in Qatar and across the GCC region,” she said.