• IMF says country heading for deficit of 2.7 percent in 2016
  • Move follows 30 percent increase in gasoline prices in January

Qatar will scrap gasoline and diesel subsidies next month as the world’s richest nation per capita is set to plunge into deficit this year after more than a decade of budget surpluses.

The world’s biggest exporter of liquefied natural gas is in the second year of a $200 billion infrastructure upgrade to help it host soccer’s 2022 World Cup. The decision to link transportation fuel to international prices follows a Jan. 30 percent increase in local gasoline prices for the lowest available grade.

Ending subsidies aims to reduce wasteful consumption, the official Qatar News Agency reported Tuesday, citing comments by Sheikh Mishaal bin Jabor Al Thani, who heads a committee studying domestic gasoline and diesel prices. 

Unlike some of its oil-rich neighbors that have cut spending, Qatar will increase outlays to 35.1 percent of GDP this year compared with 33.1 percent in 2015, according to the International Monetary Fund. As part of belt-tightening plans, the United Arab Emirates eliminated fuel subsidies last year, while Saudi Arabia, Oman and Bahrain reduced support.

Reducing and scrapping subsidies, curbing spending and seeking non-oil revenue sources has become a priority for crude exporters from Saudi Arabia to Algeria that are grappling with low prices.

Qatar is expected to post a budget deficit of 2.7 percent of gross domestic product this year, after recording a surplus of 10.3 percent in 2015, according to IMF estimates. It had an average budget surplus of 9.3 percent of GDP between 2000 and 2012.

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