As Qatar prepares its budget for the new fiscal year, ministries, agencies and companies that receive government funding have been given a set of strict guidelines while preparing their salaries and expenditures estimates for 2016.
The instructions include coming up with a plan for “replacing existing expatriate employees with skilled professional Qataris in various posts,” the Peninsula reports.
Qatarization is a long-standing goal of the government, but has been difficult to achieve because there are not enough nationals who are able and willing to fill the government’s quotas, especially in the private sector.
Budget
The budget guidelines come as officials work to control spending amid expectations that Qatar will register its first deficit in more than a decade next year, thanks in part to falling oil prices, which influence the price of natural gas.
Also for the first time, the new fiscal year will begin in January, instead of April, to mirror businesses and international financial organizations that follow the calendar year.
Because of this, agencies have been working off of an interim budget for the remainder of 2015.
Taking that into account, the Ministry of Administrative Development has instructed government entities to provide separate draft estimates of this year’s budget, as well as estimates for 2016 and beyond.
According to the Peninsula, the circular stated that:
“It is critical to enhance financial performance and fund management ministries and government agencies for a sustainable economic development of the country.
In case a government office fails to furnish details on time and according to guidelines, the ministry will submit budget estimates to the Ministry of Finance on behalf of these entities.”
New era
Qatar began working to cut the fat from government even before oil prices dropped, following the handover of power to Sheikh Tamim bin Hamad Al Thani from his father.
Speaking to the Advisory Council last year, the Emir said:
“Waste, extravagance, mishandling of state funds, lack of respect for the budget, reliance on the availability of money to cover up mistakes are all behaviors that must be disposed of.”
Months later, Sheikh Tamim passed a new law that grants additional powers to the country’s finance ministry, presumably to bring overspending departments in line.
Qatar Minister of Finance Ali Shareef Al Emadi said at the time that the new measures aim to “protect public funds.”
“The law would boost the efficiency of public spending by tracking income and expenses accurately and continuously,” he added.
Thoughts?
Yep, but we are still the richest nation on earth, aren’t we?
Per capita yes, so why do they worry. I guess they have to do something and make statements that sound good, otherwise how will they justify their huge salary and perks….
per capita (PPP), enlighten me sir, how else would you define richest -_-.
“By some measures, Qatar is the world’s richest country. But its citizens have a tendency to spend extravagantly, and three-quarters of Qatari families are in debt because of this, according to the 2011 National Development Strategy.Most owe an average of QR250,000. Qatar hopes to halve the number of indebted nationals by 2016, the report states.”
https://dohanews.co/qataris-deal-with-fallout-of-extravagant-spending/
Per-capita GDP (PPP) defines income — i.e., money flow in a time period. “Rich” is a measure of wealth — i.e., stock of money. There is a correlation, of course, but high income does not necessarily mean high wealth if the income earner is not prudent with saving and investing, as sadam mentions below.
Because the government knows its temporary, the people are just blind to it. Its hard to see the future ahead of you when the view is blocked by the sense of taking what you can now.
The Apple Corp has a higher revenue than GDP of Qatar, does that make their employees special or different? What I can see from my years here is that Qatar’s citizens and residents often confuse rich and wealth. They are not the same thing. What Qatar has is a finite natural resource. Once its gone, the “riches” will go with it. Wealth on the other hand may not mean the greatest credit limit and bank balance today, but money that truly works for itself and builds something for future generations. Once the gas is gone, or the world moves off into other energy sources, an entire generation of future Qataris will look back and resent their ancestors for having been so frivolous with their brief period of wealth. The government is trying to diversify, but in the end, too much is tied up in the price of a gallon of gas. No amount of sports or roads are going to change that. So while we get to hear in the news often, people of Qatar boasting of their per GDP earning wealth of $95,000 per person, the smart investor would go to where that income is used to expand and grow versus frivolity. The Emir was 100% right in his statements and sees what is coming. Hopefully the people grasp the reality of it before its too late.
You all seem to forget that we have international investment everywhere especially the UK the US and the rest of Europe and these are bringing a lot of profit, so stop talking about oil and gas
Yes lots of profit to the royal family and the elite, so unless you are one of them I doubt they will share it with you when it all goes T+++ up!
When did you last get a dividend check from these miraculous investments overseas? Was it paid to you in cash, or a bank transfer? Or is it all theoretical?
Overseas investments do not produce anything for a local economy. Do you ever here of a company talking about the performance of their real estate venture? Most of these are held as a trust for ranking family, not for the regular citizens of Qatar, so it will not make any difference in building a working economy for the future. This is macro economics 101 stuff. No national economy anywhere in the world is built on an industry that buys stuff in another country that does not produce any goods or services. Qatar needs to get in the business of building, not buying, creating, not consuming. Investing in art = consumption. Investing in real estate = consumption. Investment in stocks, bonds, etc. = consumption. The people that make all that stuff, those are producers. So, yes, my comments on oil and gas are pretty spot on, and in alignment with what every economist around the world says about Qatar, the Middle East, and the oil states. Otherwise, why bother with diversification programs for the economy at all, I mean, when the QIA owns some stock in Uber, who cares, right?
Richest nation my a$$. It’s just because of the black gold, that’s it. Take away all the oil fields and you’ll become more poorer than Haiti.
Oil and gas fields are here to stay my dear 😉
very true – but their presence is only of value so long as that energy is viable.
Non-gas/oil technologies are constantly improving.
It will be demand, or lack of, that will be the demise of gas/oil, not availability.
But that does not mean that the world may find another source of energy to depend on.
There is already massive amounts of research to find alternative sources.
We are rich because of oil and gas, but not because we have a strong economy. Now we are depending on nature for our wealth, nations like the U.S., Japan, etc. depend on innovation, competition and invention…it keeps their economies diversified and healthy. Even if they have a period of decline they are able to move back up.
Investments in other nations would not be enough to sustain the nation without the oil & gas field.
Also, keep in mind that the 3 richest nations (GDP per capita) are small with relatively small populations. Just because they have high GDP does not mean that they have the most powerful economies however.
I am very proud to be a Qatari and I want the best for us. But arrogance is never a valuable asset.
Well said. The end of traditonal energy provision could be sooner than many think. I want to see Qatar prosper in the future and they need to be more like Japan and less like Chile. (Read about their mining boom and bust….)
Very true. As soon as they find large reserves in areas closer to the Chinese, European and Japanese markets, Qatar’s prospects will decline–which is exactly what is happening with Australian and US production increases.
Or someone will invent a safe, cheap hydrogen fuel sell, and it will then be all over for oil and gas globally. As you said, innovation is the real future.
Bravo!!
Can I get your details, we looking for Qatari’s like you in the Company who would certainly be role models to the rest…….
“The Stone Age didn’t end because we ran out of stones.
It ended because we invented something that was more efficient”.
So the Gas fields will be there to stay, but do you think Qatar will be able to sustain the current life style when nobody wants to buy anymore gas?
Very good. I like it. “The Stone Age didn’t end because we ran out of stones.
OK but don’t forget that Qatar already have massive investments in UK, US and the rest of Europe and these generate billions of revenues!
Is there enough of the billions, lets call it 10 maybe at best to replace the $219 billion of GDP now….nope…..and when the money dries up, you think that the government is going to do what, hold onto these investments? A country can’t buy its way into an economy, there is simply not enough scale. Do they teach macro econ here?
But not near enough to sustain it. Oil and gas are still for all practical purposes virtually all of the national income. And, the largest investments overseas are in oil and gas infrastructure.
Hence, when the price dropped, Qatar’s economy took a nose dive. There is a lot of waste and inefficiency, so most Qataris will be insulated for about a year. The budget after this one (unless oil and gas prices suddenly change against all reasonable predictions) will be a brutal reality check.
$170 Billion. That is the total value of the foreign investments of the State of Qatar. What is the revenue from these investments? $17 Billion at 10% – which is crazy generous. What does the Qatar government spend annually? $62 Billion. Which does not include any of the freebies to the citizens. Now the average citizen has stocks in which companies – Qatar based securities, which means lots of stocks in what, oil and gas based firms and the banks that finance it. What happens to the stock of a company that does not produce a product anymore? That is gone. So oil, gas, and derivatives of those industries are 80% of the revenue of the state. Can you see where this is going? Its just math. If the oil price collapses, which can happen depending on whether the US and Russia turn on the taps, or energy shifts to other supplies, the house of cards all comes down. You have a deficit of $45 plus billion a year in reported spending. A stock exchange that deals in worthless stocks if oil is depressed, and a financial system setup to run on oil wealth, so a banking sector that fails because no one wants securities backed by real estate in a country with a rapidly dwindling population because the oil wealth is gone. It would not be the first time in human history this has happened, nor will it be the last. I would say, start learning up on how its flawed, and maybe your mind will change about what you should be doing instead of spending money on cars and vacations. Just a suggestion.
It’s $256 billion, next milestone is $500 billion in 2020.
I am using world bank numbers from 2014. Valuation of large assets is subjective, and 200 or 500, its never going to be enough. Economics don’t work that way. Give me a country, an entire country, that lives on interest earned in investments. It simply can’t happen. Lovely pipe dream, to put an entire country on retirement, to include future generations that grow and want more of the limited income, but, not….going….to….work. It seems that economics is simply not studied anymore. Additionally, as I said above, government spending is $62 Billion. Is this jobs for everyone. No, not enough socialism dollars in the investment for that to work for even a year…..even with a lofty 2020 goal. Also, the 2020 goal is based on $100 a barrel oil. How much investment happens when there is a budget deficit. No more free planes for Qatar Airways – that one is gone. No more fuel subsidies, gone. To think that a country can replace its economy based on investments that fluctuate and produce nothing is naive at best. Imagine what happens when real estate crashes, or stock markets flinch, etc. Wow…the thought is beyond scary. Let alone, just not possible.
i copied, pasted and prented all what you wrote to keep it and read it i think its very important, thank you!
You do realize how stupid you sound making that comment? That’s like saying Prince Charles is only important because his mother is the queen, take away his royal claim and he will be an average John Smith at the pub.
Prince Charles IS only important because his mother is the queen…. If he didn’t have the word “prince” before his first name he would have been a nobody.
If that were the case, would we all be reading this thread about how the Emir is trying cut wasteful spending and the mishandling of state funds, meanwhile the country is expected to post a budget deficit next year? (A budget deficit is where you spend MORE money than you earn, in case you are wondering – how can you be the richest country when you are in fact in debt?)
It is a perfectly sensible policy to provide employment opportunities to your citizens, but nearly all Qataris that want a job, have a job. Qataris tend to have large families, (although that is changing) but for that to make a meaningful impact on the labour market is decades away.
You only have to look at Saudi that have had nationalisation programs for decades to see that it is very hard to achieve. Some Saudis would rather be unemployed that takes jobs they see as beneath them, hence despite a large population of working age Saudis the country is still home to millions of expats.
In fact, there are regular stories in Arab News which report that tens of thousands of small medium businesses in KSA are going under because of aggressive Saudization.
The Saudi Ministry of Labour recently reported that some 2500 Government positions (the only jobs saudis are ‘content’ to take) remained vacant because Saudis don’t even want those jobs.
I have witnessed some 25+ years of KSA trying to Saudize, with results ranging from ineffective to downright disastrous?
Now I see the same philosophy being applied here in Qatar, why should the results be any different?
Well at least they now let women work in lingerie shops, rather than a Saudi women asking a nice Indian man to show her some panties….
True, the missus was happier for that.
However, just to illustrate a point concerning over-aggressive nationalisation of the job market.
http://www.arabnews.com/news/466776
It would be very different, Qatar is not Saudi Arabia…
Different yes, however I still see an awful lot of parallels between the two. Sure Saudi is bigger, but I recall the outlook of the KSA citizenry, 25 years ago, to be remarkably similar to that of the Qatari citizenry today.
I could be wrong, but Qatar is just embarking on the same road-trip, only quarter of a century later?
Qatar has a far more effective bureaucracy than Saudi Arabia, I don’t think they would impose Qatarization to such an extent that their businesses start failing.
It’s quite strange. I thought I read somewhere that the unemployment rate was 0.6%, but perhaps that is nationally and not just for Qatari nationals.
Even so, if putting nationals into the workforce is so important, whatever happened to the Qatar Career Fair?
Does Qatarization also includes blue collar jobs? Just askin’.
I am one million percent sure you know the answer 🙂
It is still too early to see if this is only talk or a serious set of measures. That said, it is wise to start checking other opportunities outside Qatar from now, particularly for those doing admin tasks that do not require advanced studies or a long experience.
Accountability and fair competition will work wonders for this nation. They just have to try.
Are Qatari working in the private sector exempt from the Labour Laws? Do they consider a private sector job to be beneath them and diminish their standing as a Qatari?
It’s just that salaries and benefits tend to be lower, whilst working hours tend to be longer in the private sector. Given that local talent is both limited and in demand, it’s a sellers market. As most sane people would, they therefore choose to go for better paid Government and Government owned business jobs, with greater benefits, rather than the private sector.
There is also a degree of prestige from working for the big national companies too and also a few Qatari women I’ve spoken with have said there’s a stigma attached with working in the private sector.
“The budget guidelines come as officials work to control spending amid expectations that Qatar will register its first deficit in more than a decade next year, thanks in part to falling oil prices, which influence the price of natural gas.” This cracked me up! How would you control the budget deficit by hiring locals when they want to be compensated way more than expats and work way less. Surely this is not rational – but then again a lot that happens here is not. Thank you DN for bringing humor to my life today.
Can someone explain to me the per capita income in relation to this article?
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Hope that helps?
thanks!
I think you need this one, the other one relates to gross GDP.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
All GDPs are not about “personal income “…
I wonder what will happen to expats when private sector companies start losing business!!
Why would they start to lose money in the first place?
Clear indication for expats to remove the thought that Qatar is home and to plan for their future, outside Qatar
The instructions include coming up with a plan for “replacing existing expatriate employees with skilled professional Qataris in various posts,” the Peninsula reports.
Sad considering expats love to work here, despite the low salaries and high cost of living.
I wouldn’t be in so much of a hurry, like kafala reform, traffic enforcement and the like there will be at least 20 years of committees and mulling before anything happens if it does at all.
The surest way to boost productivity, effectiveness, efficiency, eliminate wastage and to therefore deliver a greater return on public funds would be to totally remove quotas and restrictions on the labour market. A free market would ensure that organisations can recruit the best talent whether they be Qatari or expat. The problem with these quotas is that the indigenous labour pool is limited. It’s around 75,000 people maximum. The quotas just don’t add up, unless every local in the labour pool officially has more than one job, in which case they will not be able to dedicate themselves fully to either, which will build further inefficiency and waste in to the system. Quotas may be a metaphoric vote-winner, but in the short and medium term they’re bad for the economy and the country.
Well I guess that cleaning company needs to put its advert back up for Qatari Maids otherwise they will not get awarded any cleaning contracts by government companies or government funded companies…..