It is a decrease from the record-breaking 5.47 billion surplus recorded last quarter.
Qatar recorded a surplus of $2.74 billion or (10 billion riyals) for its second quarter, the Finance Ministry announced, despite lower hydrocarbon revenue and a sharp rise in spending.
Coming from the first quarter, where a record $5.47 billion surplus was measured, Qatar had already surpassed its predicted $7.96 billion surplus for the entire year. While budget for 2023 was based on a conservative estimate for oil at $65 a barrel, the current average now stands at $78.
Qatar’s oil revenue shrunk from a record quarter by 36.5%, but its non-oil revenue showed a resilient 438.1% increase.
Meanwhile, capital expenditures have risen from last quarter, and so have salaries and wage fees. The comparative dip in oil revenue coupled with increased expenditure explains why the surplus wasn’t maintained as Qatar looks to invest its money to acquire, upgrade, and maintain physical assets.
The ministry attributed an almost 30% jump in major capital spending in the second quarter to compensation to contractors and the completion of several projects.
The drop in hydrocarbon revenue does not indicate any problems, and this kind of volatility could be due to several factors, said Justin Alexander, director of Khalij Economics and Gulf analyst for GlobalSource Partners, to Reuters.
Qatar had previously been in a deficit following the blockade in 2017. While that has narrowed since then, this surplus comes at a time when Qatar continues to experience steady growth.
“These could include the impact on export earnings of LNG (liquefied natural gas) maintenance downtime and the timing of the dividend payments from QatarEnergy,” he said.
The budget surplus is expected to go towards repaying Qatar’s public debt, boosting central bank reserves, and increasing the capital of the Qatar Investment Authority, the gas-rich state’s sovereign wealth fund.
Total public debt reached 343.6 billion riyals at the end of the second quarter, down 3.5% from the first quarter.