Qatar ‘Very Comfortable’ With Oil Prices, May Not Sell Bonds

  • Finance minister says government hasn’t decided on debt sale
  • Says budget based on ‘conservative’ oil price of $45 a barrel

Qatar is “very comfortable” with the current level of oil prices and hasn’t decided whether it needs to tap international debt markets this year, according to Finance Minister Ali Al Emadi.

“We might not issue,” Al Emadi told reporters in Doha on Tuesday. “Given where we see the oil prices today, I think we are somewhere close to break-even.” Bank of America Merrill Lynch said in a report dated Jan. 26 it expects Qatar to sell $10 billion of bonds in 2017.

Gas-rich Qatar posted its first budget deficit in 15 years in 2016, its finances hurt by the global slump in energy prices and its $200 billion spending plan for the FIFA World Cup in 2022. Last year was “probably the most difficult” in terms of the strain on public finances, and the government has based the 2017 budget on a “conservative” crude price of $45 a barrel, Al Emadi said.

Brent crude, the global benchmark, was trading at $55.05 a barrel at 5:46 p.m. in Doha.

Spurred by lower revenue from energy exports and overlapping bureaucracy in places, Qatar has merged ministries and canceled or delayed some projects over the past two years. This helped to curb operating costs while the government continues a spending plan that will peak by 2019, Al Emadi said.

Almost 90 percent of projects related to the World Cup, including new highways, rail links and hospitals, have been awarded, he said, and two thirds of them will be completed by 2020.

"We are giving ourselves a good chance to deliver things on time," Al Emadi said. "We don’t want to be in a place where we start painting when people are coming to the country."

Opening Up

The government, which dominates the economy through the national oil company Qatar Petroleum and stakes in other industries, is seeking to open up opportunities to private businesses, both in the run up to the 2022 soccer tournament and beyond.

More than $8 billion in projects were awarded to local companies that could have been delivered by the government, and investors are being encouraged to participate in logistics, health care and education industries, Al Emadi said.

Qatar is still keen to invest overseas, with the country’s sovereign wealth fund investing $35 billion in the U.S. by 2020 as planned, he said.

For more on the $335 Billion Qatar Investment Authority, click here.

“We’ve been very much active globally,” Al Emadi said. “Part of the sovereign wealth fund strategy is to have very much a diversified portfolio. Some of the choices we’ve made over the past three or four years -- in terms of geography and currency -- have paid off for us very well.”

In recent months, the fund has invested in Turkey’s biggest poultry producer, Russian oil giant Rosneft PJSC, and U.K. gas company National Grid Plc.

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