Qatar records budget surplus of QR0.2 bn in Q1 2021: MoF report

Satyendra Pathak Doha Qatar recorded a budget surplus of QR0.2 billion in the first quarter of 2021, the Ministry of Finance (MoF) has said in its budget...

Satyendra Pathak Doha Qatar recorded a budget surplus of QR0.2 billion in the first quarter of 2021, the Ministry of Finance (MoF) has said in its budget report for the first quarter of this year.According to the report that provides detailed fiscal data covering performance during the first quarter of 2021, Qatar’s total revenue for the first quarter of 2021 amounted to QR45.2 billion driven by a recovery in oil prices. On the other hand, the total expenditure for the same period amounted to QR 45 billion. As a result, the budget balance recorded a minor surplus of QR 0.2 billion.“The total revenue for the first quarter of 2021 outperformed the budget projection by 28.2 percent. This was mainly driven by the rapid recovery in oil prices and the fact that the hydrocarbon revenue estimate for 2021 was based on a conservative oil price of $40 per barrel,” the ministry said in the report.Public expenditure during the first quarter was largely on target representing 23.1 percent of 2021 Budget, the report said adding that the combination of controlled expenditure and enhanced revenue collection shifted the budget balance from an anticipated deficit to a surplus.Total revenue of QR 45.2 billion, which accounts for 28.2 percent of the 2021 Budget, represents an increase of 14.7 percent compared to the previous quarter. The growth in total revenue was primarily supported by the steady increase in oil prices since November 2020.“Non-oil revenue for the first quarter of 2021 totalled QR5.5 billion. The relatively low collection as percentage of the total estimate for 2021 is not considered an underperformance. Non-oil revenue for the first quarter, third quarter and the fourth quarter are expected to average about QR6 billion per quarter. The substantial share of non-oil revenue is anticipated to be collected in the second quarter when corporate taxes are due,” the report said.Expenditure for the first quarter of 2021, in terms of both aggregate and chapter split, remained largely similar to the fourth quarter of 2020. However, compared to the same period of last year, total expenditure decreased 6.1 percent. The decline in operational expenditure, which is the result of measures taken by Qatar during 2020 to streamline secondary expenses, is the main factor contributing to the outcome. Expenditure on major projects during the first quarter of 2021 accounted for 20.8 percent of the total 2021 Budget. Nevertheless, larger payments are anticipated for the remainder of the year as a number of projects and milestones are expected to be delivered. In addition, the report said, newly awarded projects during the first quarter of 2021 totalled about QR 4.6 billion.According to the report, major projects to be completed in 2021 include Food Security Project, Lusail Light Rail Transit, Doha Old Port and Sabah Al-Ahmad Corridor.The report said that Qatar’s economy is expected to recover from the effects of the COVID-19 pandemic in 2021 with an anticipated real GDP growth of 2.2 percent. Factors contributing to the recovery are the National Vaccination Program, the gradual easing of restrictions, and the recovery of oil demand and price.Citing the Planning and Statistics Authority (PSA), the report said that Qatar’s real GDP contracted by 3.7 percent in 2020. The contraction was primarily driven by the COVID-19 pandemic outbreak and its adverse impact on both the hydrocarbon and non-hydrocarbon sectors. Nevertheless, the recorded contraction was smaller than the initially projected 4.5 percent by the IMF during the onset of the pandemic.On one hand, the non-hydrocarbon sector growth last year was subdued due to the preventive measures undertaken to combat the pandemic. On the other hand, the hydrocarbon sector contracted 2.1 percent last year on the back of weaker demand and declining prices due to global lockdowns and restrictions.According to the report, the level of public debt for the first quarter of 2021 remained unchanged, maintaining the same level and split as of 2020 year-end at QR381.9 billion. There were neither new public debt issuances, nor were there any scheduled maturities during the first quarter of 2021.However, compared to the same period of last year, total public debt declined 1.9 percent. Despite the $10 billion eurobond issuance in the second quarter of 2020, the Ministry of Finance was able to reduce total public debt year-on-year through a combination of scheduled payments and early redemptions during the third quarter and the fourth quarter of 2020. An early redemption of internal bonds totalling QR13.1 billion was carried out in the fourth quarter of 2020.Total internal public debt by the end of March 2021 stood at QR 152.9 billion representing 40 percent of the total public debt. The internal debt consists of local bonds and loans. Total external public debt by the end of March 2021 stood at QR229 billion representing 60 percent of the total public debt. The external debt consists of external bonds and loans. At current oil prices, the report said, the Ministry of Finance is not anticipated to require any financing for the State Budget during 2021. Moreover, total maturities for the year stand at $7.4 billion of which $4.2 billion are external. The Ministry of Finance intends to redeem external maturities in full in order to reduce the level of external debt, it said.According to the report, three FIFA World Cup Qatar 2022 Stadiums- Lusail Stadium, Al Thumama Stadium Ras and Abu Aboud Stadium-will be completed this year.Similar budget reports including revenues, expenditures, debt dynamics and other key fiscal and economic developments will be published periodically within 30 days of the end of each quarter, the ministry said.