The QNB Economics report summarizes Qatar's budget for fiscal year 2013/14 and estimates for government spending. It finds that actual spending will likely be significantly higher than budgeted due to higher than expected oil prices. The budget allocated $58 billion in spending based on $65/barrel oil, but QNB estimates $74 billion in revenue and $66 billion in spending based on $107/barrel oil. Over half of capital spending will go to infrastructure projects like rail, roads, and utilities to support development ahead of the 2022 World Cup. Government spending is an important driver of Qatar's non-oil economy and will provide opportunities for private sector growth.

1. QNB Economics
economics@qnb.com.qa
13 April 2013
Government spending will be significantly higher than budgeted in 2013/14
The Ministry of Economy and Finance recently Therefore, QNB Group estimates that actual
released its budget for the fiscal year 2013/14, government spending will be around US$66bn in
which runs from April 1st – March 31st of the 2013/14, leaving a budget surplus of US$8bn, or
following year. An oil price assumption of around 4% of GDP. We estimate that about 30%
US$65/barrel was used, the same as last year, of total expenditure will be on capital projects.
and on this basis the ministry assumes revenue of
US$60bn, of which it plans to spend US$58bn. The largest category of budgeted current spending
is government salaries, which accounted for 35%
However, QNB Group expects oil prices to be of the total in the 2013/14 budget. The remainder
considerably higher, averaging US$107/barrel for is mainly non-salary items for government
the fiscal period and leading to estimated revenue departments, such as general supplies, external
of around US$74bn. This will leave room for services and debt interest. The largest department
significantly higher spending than planned. Qatar, is General Administration followed by defence and
as with most GCC countries, tends to spend security, education and health.
considerably more than budgeted as budgets are
based on conservative oil price assumptions. In While capital spending lagged in 2012/13, the
the fiscal years from 2009/10 to 2011/12, Qatar’s current ramp up in projects will lead to an increase
actual spending was, on average, 20% more than of an estimated 29% in 2013/14. Capital spending
budgeted. in the budget can be broadly categorised into
three areas: infrastructure, education and health.
Furthermore, there are indications from recent
trade and population data that project activity has The allocation for infrastructure development went
been picking up since the end of 2012. The up by 28% and it accounts for 54% of the capital
government’s spending growth slowed in early spending budget. This spending will mainly be
2012 as it consolidated expenditure plans and directed towards the rail network, roads, real
adopted a new medium-term budget framework. estate, new Doha port and the expansion of the
However, spending is now likely to be ramped up utilities network.
as major infrastructure plans are being tendered in
order to be completed within the timeframe Capital Spending (2013/14 Budget)
required for the 2022 World Cup.
Healthcare
Government Spending
(US$bn)
66
51 23 Capital
46 54% Infrastructure
15
14 28%
Education
43 Current
32 36
Source: Ministry of Economy and Finance
2011/12 2012/13e 2013/14f Qatar Rail is an estimated US$35bn project with
initial phases set for completion by 2020. It
Source: QNB Group estimates (e) and forecasts (f) involves a 300 km of railways, including passenger

2. QNB Economics
economics@qnb.com.qa
13 April 2013
and freight, and a metro and light rail network in Health accounts for 18% of the 2013/14 capital
Doha. The initial phase involves the core elements spending budget. This will go towards a number of
of the Doha metro and light rail network. There is medical facility expansions, such as Hamad
around US$12bn currently being tendered for 62 Medical City, health centres and Sidra Medical
km of underground structures and 30 km of and Research Centre, a teaching and research
elevated structures. hospital connected to Education City.
The road projects are mainly being led by Ashgal, Looking ahead, government capital spending is
the public works authority, which has two major likely to remain at a similar level until around 2017,
projects. Firstly, the US$14.6bn local roads and after which there may be a slight tail off. The
drainage programme, mainly upgrading the current phase of projects has been accelerated in
network of roads in Doha, with completion order to be completed ahead of the 2022 World
expected in 2016. Secondly, US$8.1bn of projects Cup. The bulk of work on the major railway, road
to build the Doha, Lusail and Dukhan highways and real estate projects is expected to be
with completion expected in 2016. There are a completed by 2017. Current spending is also likely
number of additional smaller road projects, to continue steady expansion to meet the needs of
amounting to over US$1bn with completion a growing population. The government is well
expected between this year and 2016. resourced with minimal debt and is therefore
unlikely to face any spending constraints for some
The US$5.5bn Musheireb real estate regeneration time.
project in the centre of Doha will also receive
allocations from the government’s capital budget. Government spending is an important driver of
The development is expected to be completed in non-oil economic growth. As production in the oil
2016 and house over 27,000 residents. It also and gas sector has peaked for now, growth in the
includes commercial, retail, cultural and medium term is likely to be driven by non-oil
entertainment areas. sectors. The large government capital spending
plans will also provide opportunities for the private
Education accounts for 28% of the capital sector, supporting its development and helping to
spending allocation. The development of schools create a sustainable and diversified business
will receive a major portion along with other environment.
educational facilities such as Qatar Foundation’s
Education City project. Although the current ** Ends **
US$7.5bn expansion phase of Education City is
due to reach completion in late 2014, further major
expansions are likely.