QNB Expects Government Spending To Exceed Budget Plan

Doha April 13 (QNA) - Qatar National Bank Group said Saturday that it expected the average of oil prices to be much higher than the government's expectation of $65 a barrel. The group said that the average could be as high as $107 a barrel, boosting revenues to $74 billion. The Ministry of Economy and Finance recently released its budget for the fiscal year 2013/14, which runs from April 1st March 31st of the following year. An oil price assumption of US$65/barrel was used, the same as last year, and on this basis the ministry assumes revenue of US$60bn, of which it plans to spend US$58bn. Qatar, as is the case with most GCC countries, tends to spend considerably more than budgeted as budgets are based on conservative oil price assumptions. In the fiscal years from 2009/10 to 2011/12, Qatars actual spending was, on average, 20% more than budgeted. additionally, QNB said there were indications from recent trade and population data that project activity has been picking up since the end of 2012. The growth of the governments spending on the other hand slowed in early 2012 as it consolidated expenditure plans and adopted a new medium-term budget framework. However, spending is now likely to be ramped up as major infrastructure plans are being tendered in order to be completed within the timeframe required for the 2022 World Cup. QNB estimated government spending to reach $66 billion in 2013/14 fiscal year. Some 4% of the GDP will be in surplus, or $8 billion. The largest category of budgeted current spending were , they accounted for 35% of the total in the 2013/14 budget. The remainder went to items like general supplies, external services and debt interest. The largest department is General Administration followed by defense and security, education and then health. Despite the decrease in capital spending in 2012/13, the ramp up in projects will lead to an increase of an estimated 29% in 2013/14, QNB group said in its statement. Capital spending in the budget can be broadly categorized into three areas: infrastructure, education and health. The allocation for infrastructure development went up by 28%, it accounts for 54% of the capital spending budget. The spending will mainly be directed towards the rail network, roads, real estate, new Doha port and the expansion of the utilities network. Qatar Rail will cost an estimated $35 billion project with initial phases set for completion by 2020. It involves a 300 km of railways, including passenger and freight. In addition to building a metro and light rail network in Doha. According to the statement of QNB, the initial phase involves the core elements of the Doha metro and light rail network. There will be around $12 billion to be tendered for 62 km of underground structures and 30 km of elevated structures. The road projects were being led by Ashgal, the public works authority, which has two major projects. The first, according to the statement was a$14.6 billion local roads and drainage programme, mainly upgrading the roads network in Doha. The project is set to be completed in 2016. The second project was a $8.1 billion project to build the Doha, Lusail and Dukhan highways with completion also expected to be in 2016. There were a number of additional smaller road projects, amounting to over $1billion with completion expected between this year and 2016m, the statement added. Spending on Musheireb real estate regeneration project, estimated at $5.5 billion, will also receive allocations from the governments capital budget. The development is expected to be completed in 2016. The project is expected to house over 27,000 residents by the time of its completion. It also includes commercial, retail, cultural and entertainment areas. Education accounted for 28% of the capital spending allocation. The development of schools will receive a major portion along with other educational facilities such as Qatar Foundations Education City project. Although the current $7.5 billion expansion phase of Education City is due to reach completion in late 2014, further major expansions are likely. As for health sector, it accounted for 18% of the 2013/14 capital spending budget. The sum will go towards expansion in a number of medical facilities such as Hamad Medical City, health centers and Sidra Medical and Research Centre, a teaching and research hospital connected to Education City, the release said. QNB expected that government capital spending will remain at a similar level until around 2017, after which there could be a slight tail off. The current phase of projects has been accelerated in order to be completed ahead of the 2022 World Cup. The bulk of work on the major railway, road and real estate projects should be completed by 2017. Current spending was also likely to expand to meet the needs of a growing population. The statement said that the government is well resourced with minimal debt and is therefore unlikely to face any spending constraints for some time. (END)