ASIF IQBAL DOHA THE move by the government to inject billions of dollars into the welfare system through a big hike in public sector salaries, pensions and other benefits ranging from 60 to 120 percent was reflected in the Qatar Exchange (QE) Index that rose for the second consecutive day on Wednesday.

The benchmark stock index closed at 8,398.28, up 0.67 percent on Wednesday with Qatar National Bank (QNB), the nation’s biggest lender by assets, climbing 1 percent, Doha Bank, the fourthbiggest bank by assets, gained the most since August 17 to close at QR 60.5
Commenting on the government decision, Yousif Mousa Abuhelaiqa, a prominent Qatari investor, told Qatar Tribune that it was a welcome move and hoped that the private sector would follow suit. “The private sector is playing an important role in the country’s economy and therefore it is legitimate to have a pay hike for private sector employees as well,” he said.

Asked if he feared the pay hike would generate inflationary pressure, Abuhelaiqa said, “Worries on this count are bound to crop up but I’m confident that the government machinery would keep tabs on consumer goods prices.” He added: “The move will definitely boost market sentiments in Qatar as investors would put their money in the stock market especially after the interest rates have come further down.

On September 1, the Deputy Emir and Heir Apparent His Highness Sheikh Tamim bin Hamad al Thani had announced that civilian employees would have a 60 percent increase in basic salary and social allowances, while the raise for military personnel will range from 50 percent to 120 percent with the officer-rank personnel getting 120 percent raise and other staff 50 percent hike in salary and social allowances.

According to Abuhelaiqa, the salary hike would definitely increase spending but it may also give the nationals more liquidity to invest in the local bourse. He said the country has been vigilant about the threat of chronic inflation, with the central bank this year issuing a string of local currency bonds to domestic lenders to soak up excess liquidity.

Qatar News Agency (QNA) on Tuesday said retiring civil servants in Qatar would see a 60 percent boost to their overall pension, while pensions for military staff would increase 50 percent. Military staff with the rank of officer will receive a 120 percent rise in the value of their pension.

Some QR10 billion will be set aside for meeting the increased salary and social allowance bill, QNA said, adding that a further QR10 billion was to go towards the pension fund.

Retiree subscriptions would amount to QR10 billion, it said.