Qatar budget spending to jump 18% this year

Updated 02 April 2013
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Qatar budget spending to jump 18% this year

DOHA: Qatar plans to boost government spending by 18 percent to 210.6 billion riyals ($57.8 billion) in the 2013/14 fiscal year that began on Monday, the QNA state news agency quoted Finance and Economy Minister Youssef Kamal as saying.
Analysts said the planned spending increase suggested that after a slower start than many businessmen had expected, the state was moving to implement a massive infrastructure building program in preparation to host the 2022 World Cup soccer tournament.
“It shows how serious the country is about racheting up infrastructure development to get ready for 2022,” said Farah Ahmed Hersi, senior economist at Masraf al Rayan bank in Doha.
Simon Williams, HSBC’s chief economist for the Gulf, said: “Budgeting in Qatar should be taken as a statement of intent rather than a detailed financial plan.
“This budget makes clear that Qatar not only intends to drive spending upward, it has the means to do so.”
The emir approved a budget with revenues of 218.1 billion riyals and a planned surplus of 7.4 billion, well down from a surplus of 27.7 billion riyals it pencilled in for the previous fiscal year, QNA said.
“The surplus decrease is understandable. When external accounts are that healthy, there is a natural tendency to increase spending, and in doing so, you dig into your surplus. But that’s okay — 7 billion riyals is still quite healthy,” Hersi said.
Williams said he was not concerned by the anticipated surplus decrease.
“The real challenge for them is to execute what’s planned.”
Qatar’s infrastructure building plans envisage spending about $ 140 billion through 2022 on a rail system, a new airport, a seaport, and hundreds of kilometers of major new roads in addition to stadiums for the soccer tournament.
The building plans, which would tax the skills of a much larger country, risk causing bottlenecks, waste and a jump of inflation if they are not managed smoothly.
Kamal said in a statement carried by QNA that the new budget was based on a number of considerations: “The first of which is that there are indications that the world economy is on its way to improvement, despite the fact that these expectations are marred with uncertainty.”
The government decided to keep the oil price which its budgets assume unchanged at $ 65 per barrel, Kamal said. Brent crude oil is currently well above $ 100.
Economic growth in the world’s top exporter of liquefied natural gas is expected to be more than 4 percent this year, driven by the non-hydrocarbon sector, especially services and construction, Kamal said.
Qatar’s state budget leaped into a large surplus of SR 94.6 billion in the July-September period, the second quarter of its 2012/13 fiscal year, equivalent to 53.9 percent of gross domestic product in that period, preliminary central bank data show.
Analysts polled by Reuters in January forecast Qatar’s budget surplus would be 9.1 percent of GDP for the whole 2012/13 fiscal year, narrowing to 7.5 percent in 2013/14.


France’s Total boosts Cypriot gas plan as it eyes Iran exit

Updated 59 sec ago
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France’s Total boosts Cypriot gas plan as it eyes Iran exit

  • French energy company Total says it is looking to expand its search for natural gas off Cyprus’ south coast
  • Total is partners with Eni to search for oil and gas in two other areas off Cyprus

NICOSIA: French energy company Total says it is looking to expand its search for natural gas off Cyprus’ south coast and seeks to secure another exploratory drilling license, days after warning it could exit Iran over renewed US sanctions there.
Stephane Michel, Total’s Middle East exploration chief, said Monday that the company has applied for a license to search for hydrocarbons in Block 8, an area south of Cyprus where Italian company Eni is already licensed to carry out exploratory drilling.
Total is partners with Eni to search for oil and gas in two other areas off Cyprus. In one of the two, Eni said in February it has discovered a “promising” gas deposit with similar geological features as that of another discovery in Egyptian waters it described as the largest ever in the Mediterranean.
Cyprus Energy Minister Yiorgos Lakkotrypis called Total’s move an “important development” that expands the company’s exploration footprint off Cyprus.
Lakkotrypis said what gives the move added weight is the fact that Total’s interest comes three months after Turkish warships blocked a drillship from carrying out exploratory drilling by Eni in Block 3, an area southeast of Cyprus.
“After all that happened in Block 3, we see one of the most important partners of the Cyprus Republic wanting to expand its presence inside the Exclusive Economic Zone, especially in an area like Block 8 which is still unexplored.”
Turkey opposes what it calls a “unilateral” gas search by the ethnically divided island’s Greek Cypriot-run government, insisting that it flouts the rights of breakaway Turkish Cypriots to natural resources. Only Turkey recognizes a Turkish Cypriot declaration of independence and claims parts of exploration areas south of Cyprus which it says fall within its continental shelf.
The Cyprus government says any potential gas proceeds will be shared equitably with Turkish Cypriots after an accord reunifying the island is reached.
A deposit discovered off Cyprus by Texas-based Noble Energy in 2011 is estimated to contain around 4.5 trillion cubic feet of gas.
Total’s move also comes just days after it said it would have to withdraw multi-billion-dollar project in Iran unless it is granted a waiver by US authorities. The group said it cannot afford to be exposed to US sanctions, including the loss of financing by American banks.