The first budget approved by Emir Sheikh Tamim bin Hamad Al Thani will hike spending to an all-time high by increasing compensation for government employees and ramping up construction ahead of the 2022 World Cup.
According to state news agency QNA, Qatar plans to spend nearly $60 billion (QR218.4 billion) while bringing in revenues of $62 billion (QR225.7 billion).
The 2014-2015 financial plan also includes a promise to construct 85 new schools over the next year and a half.
The move should mitigate the strain on Qatar’s overburdened education system, which is struggling to keep up with the country’s rapid population growth and is hindering some companies in recruitment of expat workers.
Previously, the Public Works Authority (Ashghal) pledged to build 44 new schools and kindergartens over the next couple of years, including 29 schools and 15 kindergartens by the end of 2014.
The promise of new schools is one of the few specific details contained in QNA’s otherwise high-level summary of the budget, which says expenditures are projected to rise 3.7 percent.
As in past years, revenues figures are projected based on conservative oil prices. This year’s budget assumes oil will trade for $65 a barrel, even though the current price is more than $100.
The budget summary makes several references to controlling inflation – a priority of the Emir – through coordinated monetary and fiscal policy as well as increasing “the efficiency of government spending.”
“Any expansion in spending must be accompanied by a proactive management in order to avoid any pressure from inflation,” Finance Minister Ali Sharif Al Emadi said in the budget summary.
Major projects
While the climbing costs of consumer goods and home rentals are a common complaint among many residents, inflation is also a major concern for construction companies and government officials overseeing the country’s massive building boom.
Earlier this month, the International Monetary Fund noted that Qatar has already experienced delays and cost overruns related to its infrastructure projects, and “will continue facing the risk of cost escalation given its commitment to a compressed timetable ahead of the 2022 (World Cup) championship.”
The IMF recommended government planners to prioritize certain initiatives over others, or construct projects more gradually.
Meanwhile, Reuters recently reported that labor shortages, bureaucratic delays and rising costs were prompting Qatar officials to reschedule 15 percent of its development projects – particularly those not directly tied to the 2022 World Cup – in the coming years.
The 2014-15 budget nevertheless calls for a 16.8 percent increase to QR87.5 billion ($24.03 billion) in spending on major projects, “enough funds for … the execution of mega infrastructure and transport projects such as the rail projects related to the preparation for hosting the 2022 World Cup,” Al Emadi stated.
Here’s the breakdown of the three major sectors in the budget, which account for 54 percent of spending:
- Infrastructure and transport costs will jump 21.94 percent to QR75.6 billion ($20.76 billion);
- Education spending will rise 7.35 percent to QR26.3 billion ($7.22 billion); and
- Health care costs will go up 12.14 percent to QR15.7 billion ($4.31 billion).
Earlier in the day, Ibteihaj al-Ahmadani – the head of the Health Committee at the Qatar Chamber – said the country would spend more than QR4 billion ($1.1 billion) over the next five years to build and equip hospitals and medical cities, according to The Gulf Times.
Government costs
According to the Peninsula, the budget has increased allocations to provide housing for Qataris by 18 percent to nearly $1 billion (QR3.3 billion). The newspaper states that the money would be used to finish 3,700 housing units under construction and to build 2,300 new homes for 6,000 nationals, “ensuring that there is no waiting list for housing.”
The compensation bill for government employees is also forecast to go up – by some 7.3 percent to QR47.5 billion ($13.04 billion), nearly double the QR25.2 billion ($6.92 billion) spent on wages and salaries three years ago.
It was not stated whether the increase would be due to salary hikes or simply to accommodate growth in the size of the civil service. However, governments across the Gulf have in recent years increased salaries in the public sector, which is predominantly comprised of the local (not expat) populace.
A salary increase in the public sector here would not be unprecedented. As Deputy Emir in 2011, Sheikh Tamim issued an order to raise wages for all nationals in government jobs by 60 percent – an $8 billion outlay. He also increased pay in the judiciary by 120 percent last August.
Apart from the salaries of civil servants, Qatar’s 2014-15 budget proposes to reduce the cost of government. Current expenditures are forecast to drop 8.2 percent to QR71.2 billion ($19.55 billion) while capital expenditures are expected to decline 12.1 percent to QR12.3 billion ($3.38 billion).
At the same time, officials want private businesses to do more of the work traditionally performed by the government.
Al Emadi said he wants to avoid competition between the public and private sector as well as award more projects to businesses. He’s also encouraging “ministries and different government bodies to give supporting business and services to the private sector.”
Thoughts?
The most interesting point is more money for government employees, buying loyalty and encouraging more Qataris to work in the public sector. They were at one point trying to get more Qataris to work in the private sector but now it seems that will be left almost exclusivley for expats. That is an unbalanced nation.
I’m wondering if it is too costly to give expat govt employees 20% increase whenever they award the Qataris 60%?
it is not a question of cost, but why should they? They have nothing to gain by increasing expat salaries by 20%
All we can do is brace for new attack of inflation.
Not really, Qataris make up such a small part of the population and their spending on basics will not increase. Inflation is caused by other factors not increases for locals.
However the price of luxury cars may go up is the locals get big rises, so maybe you are concerned that Rolls Royce will be priced out of your reach.
You are very, very wrong. For starter, the gov is now finding it hard to hire qualified expats because they cannot offer them competitive salaries, they are limited to the current pay scales. BTW, they would have gained some humanity.
Well that is a different subject entirely.
shhhh dont say anything they might change there minds and i wants me a raise dag namit
Hey I hope you get it, I don’t begrudge the locals a thing. It’s your countries money and you can spend it how you see fit. Moaning expats that are never happy and complaining the locals get paid too much. I don’t understand why they don’t take a job in a country like India where 100s of millions live in poverty and then they can feel good about themselves.
Is that 85 new independent schools they will build? Because we know how much we all want to send our children there.
Good question. Can you get some clarity Doha News?
There was no breakdown, but in the past year Ashghal has been building schools and the Supreme Education Council has been asking both private and independent schools to fill them.
It may be worthy for Doha News to investigate where these new schools are to be located, how many children can be accommodated and what curriculum will be taught in them. It seems Doha needs more space for Indian schools, European & UK schools as well as Arabic based styles. Working for a company that aims to increase staff levels this year it is a major headache for us if the people we need & want for our projects won’t come if there is no education for their children.
If the rumours are true, there is a new school due to be open in Doha in the near future and has already been commandeered by Sidra and I believe also QF for their employees. American curriculum. Booked out before even open.
Heard the same.
There is another private school opening, not sure if it is the same one … It’s an IB curriculum, open now for admission for KG 1-3 as well as grade 1-2 … guess this one will be booked out soon as well, they will start in Sept 2014 … and tuition fees are on the higher end although still acceptable, I would say …
I actually heard these are all independent schools, still trying to get some more info on this though … I personally do hope that these 85 school buildings are for both independent and private schools, otherwise it will not really solve the current problem …
I hope out of those 85 new schools at least 8.5 of them are of good education quality.
There is a big difference between schools and child storage facilities. Many of the for-profit overnight ventures in this country called schools are the latter. True schools invest their money back into the school, not into a sponsoring company or sponsoring Sheikh’s pocket.
But won’t they need to recruit more expats to build all these extra schools?
Don’t understand why more houses are required for nationals as surely all these towers on The Pearl and Lusail City can accommodate…..or are these built for nationals to buy and rent out to expats for high sums?
Rising Nationals salaries = landlords rising rents! which are already the highest in the Middle East = Ex Pats leaving, housing allowances and salaries do not rise year on year.
Expats leaving… Great 🙂
And who will shop in your malls, eat in your restaurants etc. etc. when we have left? Most local businesses would close so please think things through before you speak.
I hope that this is a joke. Having that said, the development idea is an Al Thani one and not a Qatari one. Have I mentioned Al Thani Corp in the past?
That is a very unkind statement and a bit silly. You should think before you comment.
If that were true, Qatar would turn into Waterworld… without the water.
“Expats leaving… Great” Yeah thats funny until you realize that you have no population to even sustain industry growth… Then its more like “Expats Leaving… Oh S@#1” LOL! I’m a comedian… I know!
How do you connect rising Qatari salaries to landlords raising the rent? Qataris very rarely rent and make up a tiny part of the market.
I didn’t say Qatari’s would raise rents, the economics are: if the salaries are higher, there is more disposable income, therefore landlords of any nationality raise rents.
why would a landlord increase his rent when local salaries increase? most of the people renting aren’t locals
The point is, if there is more disposable income in the market, landlords will not discriminate between Qataris and ex pats, rents will rise even higher than they are already.
Can they include the promise of classes to help business owners transition from Kafalah? I know… I know… Off subject but I figured I’d take the opportunity to throw that jab in there. 🙂
” local (not expat)” whats with the definition of local? surely by saying local we already know you dont mean expats