Executive Summary
Crude oil prices have declined by 69% since Jun'14, and are forecasted to remain low in the medium term by most international agencies, such as the World Bank, IMF and other global investment banks. The fiscal and current account surpluses enjoyed by many of the gulf states is expected to come to a halt, with Qatar facing a fiscal deficit situation for the first time in 15 years. Thus far, Qatar has managed the falling gas prices through a combination of secure long-term supply contracts, and flexible supply arrangements, but continues to be extremely reliant on hydrocarbon revenues. Part of the government's revenues is invested in its sovereign wealth fund, while most of it is used to pay wages for public sector employees (21 per cent), support large scale energy and utility subsidies, capital transfers and grants for citizens, such as housing grants of QR 1.2mn per citizen. But with worsening fiscal condition amid the low hydrocarbon price environment revenue streams would need to be used efficiently, and wasteful expenditures need to be curbed. Priority has been shifted to capital expenditures, increasing role of private sector in the economy, and to reduce expenditure incurred in the form of subsidies.
