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Qatar is set to post a record budget deficit in 2016, possibly as much as $21bn according to MEES estimates. Spending has been cut, but by much less than revenue. And civil servants are sitting pretty: their salaries buck the trend rising to a record of almost 25% of GDP.
Qatar has slashed government spending in its 2016 budget by 9.4% as it seeks to balance its books following the plunge in oil prices. But even this is not sufficient to prevent the emirate from projecting its first budget deficit in 15 years.
The freshly-released 2016 budget projects a deficit of QR46.5bn ($12.8bn). And even this looks optimistic. The budget is based on an average 2016 oil price assumption of $48/B. This no doubt appeared reasonable to Qatari planers whilst the budget was being drafted. Qatar’s main export grade, Qatar Marine, averaged $46/B as recently as October with futures markets projecting a rise to around $50/B for 2016. But the collapse in prices in recent weeks means the grade is currently valued at just $32/B. MEES calculates that if this were to persist, Qatar’s deficit would balloon to QR75.2bn ($20.7bn, see table).
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