Oil price estimates fuel Qatar budget lift

Qatar has allocated a generous US$5 billion for infrastructure development projects, in the state’s 2006-07 budget. The new budget, confirmed last week, is the largest the country has so far unveiled, and reflects Qatar’s ambition to establish itself as a major economic force in the Middle East.

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By  Andrew White Published  April 9, 2006

Qatar has allocated a generous US$5 billion for infrastructure development projects, in the state’s 2006-07 budget. The new budget, confirmed last week, is the largest the country has so far unveiled, and reflects Qatar’s ambition to establish itself as a major economic force in the Middle East. Revenue estimates are put at US$15.6 billion, while expenditure planned is US$15 billion. This will leave an expected surplus of around US$632 million. Spending on infrastructure projects is up by a massive 70%, from US$3.2 billion in 2005-06. Such projects include roads, sewage, electricity and water, the establishment of a new airport and seaport, and the modernization of industrial areas to boost small and medium-sized industries. In addition, a separate outlay of US$86 million has been allocated for popular housing, as the government aims to provide relief for citizens suffering from the country’s acute housing shortage. The shortfall has triggered soaring land prices, and exorbitant rent increases. The construction of over 2,000 housing units is currently underway, and state housing projects for senior staff have been allocated a further US$106 million. The budgetary estimates were unveiled by Minister of Finance His Excellency Yousuf Hussain Kamal, after they were endorsed by the Emir His Highness Sheikh Hamad bin Khalifa Al Thani. The education programme has continued to receive a lavish allocation, with US$1.5 billion earmarked for the sector. Of this, US$144 million will be assigned to major, high-profile projects. Likewise, the health sector remains another key area, and will receive an allocation of US$1 billion. Of this, US$173 million is designated for the completion of Hamad Medical City, starting work on the proposed Al Ganoub (South) hospital, the expansion of Al Shamal hospital, the establishment of new health centres, and the expansion of Hamad General Hospital and Rumailah Hospital. “The budget is being unveiled amidst promising circumstances, and the success of the strategies and policies followed by the Emir,” Yousuf Hussain said, revealing that Qatar’s GDP reached US$35 billion by last year-end, from US$8.2 billion in 1995. Yousuf Hussain also claimed that the investment of Qatar’s fiscal reserves would help to significantly reduce the state’s dependence on oil income, and ensure strong, sustainable growth. Estimates for the previous year were based on an oil price of US$27 per barrel. However, the price for 2006-07 has risen to US$36 per barrel. Hence, the increase in revenue over 2005-06 is 50%, or US$5.2 billion. Total expenditure shows an increase of US$4.6 billion, over the 2005-06 figure of US$10.4 billion, and the surplus estimated for the last financial year was US$60 million.

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