By: Eman Ghaly

Mubasher: After recording its first budget deficit in almost 15 years in 2016 following the sharp drop in oil prices, Qatar began relying heavily on debt issuances such as bonds and sukuk to finance its deficit, particularly as the Gulf state remains committed to hosting the World Cup 2022.

The country’s total local debt issued by the Qatar Central Bank (QCB) surged 66.3% to QAR 46.5 billion ($12.7 billion) in 2017 from QAR 27.9 billion ($7.6 billion) in 2016, according to data compiled by Mubasher.

Despite a 39.1% decline in its budget deficit to QAR 28.3 billion in 2017 from QAR 46.5 billion the year before, Qatar has continued to issue debt varying between government bonds, Islamic sukuk, and treasury bills (T-bills).

Bond issues

The QCB’s bond issues jumped 61% to QAR 18.47 billion in 2017 from QAR 11.47 billion a year ago, whereas sukuk issues surged 170% to QAR 15.4 billion from QAR 5.7 billion in 2016.

As at the end of October, government bonds issued amounted to QAR 70.2 billion, of which QAR 16.55 billion will mature in 2018, according to data by the QCB.

Similarly, sukuk issued until the end of October amounted to QAR 42.08 billion, of which QAR 8.9 billion will mature next year.

T-bills

The QCB also increased 16.9% year-on-year to QAR 12.6 billion in 2017 from QAR 10.7 billion, according to Mubasher’s data.

T-bills are short-term debt issued by central banks in order to provide cash liquidity and to influence money supply and purchasing power.

Forecasts 

Global institutions have projected that Qatar will increase its dollar-denominated bond issues in 2018, even though its budget deficit is forecast to reach QAR 28.1 billion next year.

Earlier in December, Yousuf Mohamed Al-Jaida, CEO of the Qatar Financial Centre (QFC), revealed that Qatar was considering issuing $9 billion in global bonds in 2018, noting that the issues will depend on the place they will be launching, indicating that Asian investors were the top buyers of Qatar’s debt.

Translated by: Nada Adel Sobhi