Qatar’s investment income dives in 2010-2011

Qatar’s investment income, mainly by the state oil operator, tumbled by 33 per cent during fiscal year 2010-2011 and the decline depressed total revenue by nearly QR14 billion, leading a sharp contraction in the fiscal surplus.

Official data showed other revenue also recorded a steep fall during that period mainly because of a government decision to cut tax.

The decline in both income sources was partially offset by a surge in oil and gas revenue due to higher crude prices and an increase in the Gulf country’s LNG exports, showed the figures by the Qatari central bank.
 
From around QR53.8bn ($14.8bn) during 2009-2010, the country’s investment income dipped to about QR36bn during 2010-2011, the central bank said in its annual report for 2010.

“The cash inflow to the budget investment revenues, which represent the second main cash source of public revenues in Qatar, have considerably decreased by QR QR17.8bn or 33 per cent…this depressed its share of the total public revenues from 31.9 per cent to only 23.1 per cent during this year,” it said.

“The sharp reduction in the cash payments of dividends in investment revenues is attributed to the decline in the profits of Qatar Petroleum (QP) during 2009 (transferred to the State Budget for the FY (2010/ 2011)) compared to 2008 partly due to the decline of the average oil prices during 2009 to $63 a barrel as compared with $92 a barrel in 2008.”

The report showed other revenue also tumbled from around QR32.4bn to QR22.9bn in the same period.

“The third source of the Government’s income, represented in the revenues collected from various fees and taxes, witnessed a decrease of QR 9.5bn or 29.2 per cent…these changes are mainly due to the government’s new tax policy, according to which the income tax rates have been reduced.”

The report showed oil and gas revenue, the main source of income in Qatar, swelled from around QR82.8bn during fiscal 2009-2010 to around QR96.8bn during 2010-2011.
 
Despite the increase, total revenue shrank from nearly QR169.14bn to QR155.9bn.

The decline in total revenue was coupled with a sharp increase in expenditure from around QR115bn to QR142.3bn.

This result in a steel fall in the country’s fiscal surplus from around QR54.1bn to nearly QR13.5bn, one of its lowest levels in 10 years.

Turning to the 2011-2012 fiscal year, which began on April 1, the report said Qatar, the world’s third largest gas power, assumed an oil price of $55 for that year’s budget, the same level projected for the previous budget.

It noted that the 2011-2012 budget was the highest in Qatar’s history, involving forecast spending of QR139.9 billion. Revenues were estimated at QR162.47bn, leaving a surplus of nearly QR22.53bn.

Analysts believe the actual budget surplus will end the year sharply higher despite an expected rise in spending, noting that crude prices could be at least 70 per cent higher than the budgeted price.

The report showed investment revenue would sharply rebound to around QR53bn in the current fiscal year while other revenue would also surge to nearly QR38.6bn.

“In terms of public expenditures, the budget reflected Qatar’s endeavor to achieve the fundamental objectives of “Qatar’s National Vision 2030” in order to promote the human, social, economic and environmental development by continuing to focus on the basics of sustainable development in those areas.”

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