As many residents prepare to escape Qatar’s summer heat and finalize their holiday vacations, Muslim clerics here have been advising travelers to avoid depending on bank loans to fund their trips.
During Friday prayer sermons over the weekend, many scholars warned residents that taking out loans to go on extravagant vacations could cause them to fall into crushing debt, Al Raya reports.
Speaking at the Sheikh Muhammad Ibn Abdul Wahhab (State) mosque, Sheikh Abdullah Al Sada said such debt could spur residents to make other poor choices, including lying and issuing false promises.
If they are unable to pay off the loans, some people may face jail time, he warned.
Instead of financing trips with loans, economic experts suggested taking more affordable vacations, saving up for holidays or only taking out a loan after ensuring they would be able to pay it back, according to Al Watan.
Businessman Mohammad Abdullah Al Obaidly told the newspaper that saving from 10 to 20 percent of one’s monthly income to go on holiday could go a long way in lowering the numbers of personal loans taken out in Qatar.
However, like in the rest of the Gulf, many residents here struggle to save money, either due to the rising cost of living or because they live lifestyles outside of their means.
When it comes to vacations, Qatari households spend on average QR5,711 a month (11.5 percent of their income), while expats spend about QR1,648 (9 percent) monthly on traveling abroad, according to government figures issued last year.
In recent years, personal loans – including for travel and holiday-related expenses – taken out by both expats and Qataris have also grown, according to Qatar Central Bank data.
This was in part due to the rapid increase in the population, in addition to the low rates that banks in Qatar charge on personal loans, which is from 2 to 4 percent, according to the Peninsula.
Debt appears to be a particularly widespread problem among Qataris. The 2011 National Development Strategy (NSD) states that three out of four nationals owe money, with most in the red by an average of QR250,000.
But the report added that the government hopes to halve the number of indebted citizens by 2016.
One way to reduce debt among Khaleejis, according to Mohammed Qasim Al Ali, chief executive of UAE-based National Bonds, should be to tackle the pervasive culture of excessive wealth and love of luxury goods:
“This is one of the root causes of the lack of savings culture in the GCC because people are looked after by their governments with free education, free hospitals and no taxation. All of these contribute to people depending on third parties whether it’s their parents or the government and they get locked into their living standards,” he said.