Sep 08 2010 |
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Outlook for 2010-11: Policy trends
In spite of the global squeeze on credit, Qatar is pressing ahead with infrastructure projects (such as a causeway to Bahrain and a railway network) and expanding its liquefied natural gas (LNG) production capacity, to 77m tonnes/year (t/y) by early 2011. A moratorium on signing new gas export agreements is in place, until at least 2013, and will only be lifted on the basis of the results of a study into the North Field's long-term potential and projections of global gas demand. Qatar has traditionally used loans and bonds to finance economic development projects, and a number of major Qatari firms successfully tapped credit markets in 2009 and 2010 for both refinancing and expansion. However, if any key projects faced delays owing to an unavailability of credit, the government would draw on its sovereign wealth fund, the Qatar Investment Authority ( QIA ), to ensure that they proceed as planned. (Qatar began the development of its LNG programme during the 1997-98 oil price crash and so has positive experience of investing through downturns.)
In a signal of Qatar's confidence, branches of the QIA , such as Qatari Diar, are even taking on new debt to finance major foreign investments. The government will have re-evaluated some of its previous reform priorities because of the global recession—in January, for example, the Qatar Financial Centre (set up in 2005, under its own byelaws, to attract major global financial institutions) cut one-third of its workforce—but it has implemented a long-promised cut in corporation tax to 10%, in line with a proposed flat tax across the Gulf Co-operation Council (GCC), and will further encourage investment by streamlining licensing and financial sector regulations.
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