Qatar makes delayed down payment on French fighter jets
Qatar has made the first down payment on its order of 24 Rafale fighter jets, eight months after it agreed to the purchase with French manufacturer Dassault.
The move puts an end to speculation that Qatar might be having second thoughts about the deal, which is thought to be worth around €6.3 billion (QR25.7 billion).
French newspapers had speculated that a huge fall in global energy prices was behind the delay, with French financial newspaper Les Echos suggesting that Qatar’s government required a loan via US banks to help finance the deal.
The news of the down payment came just before Qatar’s Emir approved a government budget for 2016 that significantly cuts expenditures.
The document shows that the country plans to spend 7.28 percent, or QR15.9 billion, less next year.
A growing hole in the country’s finances due to falling oil and gas prices has made the government make some tough choices.
The total deficit in next year’s budget is estimated at QR46.5 billion.
Instead of cutting expenditure further, however, Qatar’s Finance Minister Ali Shareef Al Emadi said that Qatar had decided to borrow money to make up the shortfall, rather than tapping into its vast savings.
Qatar’s deal with Dassault was signed in April this year, ending a bidding war between the French manufacturer and rival aerospace firms in the US and UK.
The down payment means Dassault can now begin to build the 24 jets, the first of which are due for delivery in 2018.
The deal also includes the training of 36 pilots and 100 aircraft mechanics.
Qatar’s commitment to upgrading its air force with new fighters is part of a massive military buildup that has seen the government order some QR87 billion worth of new equipment in the last couple of years.
In a recent report, Jane’s Defence concluded that this trend was likely to continue “in the short term,” but that is was unclear whether Qatar’s focus would “shift elsewhere” in the longer term due to financial pressures.