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Satyendra Pathak
Doha
Qatar is projected to report budget surpluses in 2018 and 2019 on higher oil and gas revenues, Kamco Research has said in a report released on Sunday.
Kamco Research has attributed Qatar's returning to budget surplus to higher oil prices expected for 2018 and the ongoing revenue side initiatives and expense optimisation undertaken by the government.
Highlighting Qatar's return to fiscal surplus on quarterly basis, the report said,"Qatar reported a fiscal surplus of QR1.04 billion in the first quarter of 2018 after posting fiscal deficit of QR35 billion in 2017."
The surplus in the first quarter of 2018 came in as a result of 22.3 percent quarter-on-quarter growth in revenues while expenditure went down by 4.8 percent over the same period, the report said , adding that fiscal surplus amounted to 0.6 percent of the GDP in the first quarter of 2018.
Qatar's deposits in foreign currencies also increased by 4.9 percent in August from the start of the year, the report said.
The Kamco report also revealed that higher oil revenues are expected to reduce GCC budget deficit this year by 82 percent to $14 billion compared to $79 billion in 2017.
As a result, the report said, the region's fiscal balance is forecast to turn to a surplus in 2019, recording $30 billion, against earlier expectations of a surplus only by 2020.
"Consensus of oil price forecasts and oil price futures point towards $70 a barrel or higher, and this should aid GCC budgets in our view," the report added.
"The backdrop of higher oil prices will also aid the expansionary budgets for 2019, as announced by some of the GCC countries in their preliminary budgets," Kamco Research highlighted.
Current account surpluses are also expected in the GCC over 2018 and 2019, and are expected to average over 7 percent of GDP over the period, the report said.
Kamco Research sees better flexibility for fiscal and debt management for the region in 2019 as GDP estimates of GCC countries for second quarter of 2018 point towards growth for the region in 2018, from both oil and non-oil sectors.
Moreover, the report said, healthy budget revenues and adequate room in terms of balance of trade should give GCC countries ample flexibility for debt management, in terms of timing and ascertaining size of future debt issuances.
"The announcement of pro-expansionary budgets coupled with higher prevailing oil prices are positive in our view and shows commitment towards diversification efforts and improving non-oil economic growth," the report said.
Going forward the nature of the OPEC+ agreement in 2019 and global trade developments will be significant for oil prices and its impact on the GCC region, the report said.
Inflation trends reported for August this year suggested that overall consumer prices grew across the UAE, Kuwait and Qatar as quarterly inflation indices inched up between 10bps-30bps, while Saudi Arabia and Bahrain witnessed lower inflation levels, the report said.
Money supply (M2) growth as of August declined across the GCC as compared to June, the report said adding credit disbursed across the GCC was positive quarter-on-quarter in the second quarter of 2018, but witnessed mixed trends in August as compared to June this year.
