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Qatar’s gas expansion plans to drive budget surplus until 2030

A worker at Shell's Pearl GTL facility in Doha, Qatar. The country has yet to set a net zero target Shell
A worker at Shell's Pearl GTL facility in Doha, Qatar. The country's budget surplus is forecast at 8.6 percent of GDP in 2024

Qatar is expected to retain budget surpluses until 2030, driven by an increase in gas production at the North Field Expansion (NFE) project, Fitch Ratings has said.

The budget surplus is forecast at 8.6 percent of GDP in 2024, compared to 9.3 percent percent in 2023, the rating agency said in a report.

“Oil and gas revenue will only marginally drop as Brent oil price will average $80 per barrel in 2024 compared to $82 in 2023. We expect a budget surplus of 6.2 percent in 2025, despite lower hydrocarbon prices at $70.”

Fitch also upgraded the long-term foreign-currency issuer default rating to “AA” from “AA-“, supported by its large sovereign net foreign assets, one of the world’s highest ratios of GDP per capita and a flexible public finance structure. The outlook remains stable.

However, the country’s heavy dependence on hydrocarbons, below-average scores on some governance measures, higher government debt-GDP ratio and substantial contingent liabilities remain a burden.

The first phase of the NFE project will start supporting fiscal revenue fully from 2026 and phase two in 2027, given there are no construction delays. This will bring down Qatar’s fiscal breakeven oil price to $50 per barrel in 2027 from around $64 in 2024.

“New spending commitments will amount to a modest fraction of the new liquefied natural gas revenue, as Qatar’s spending plans on economic diversification are more modest than regional peers,” Fitch said.

In addition, the debt-GDP ratio is expected to fall to 47 percent of GDP in 2024 and 45 percent in 2025 from a peak of 85 percent in 2020, reflecting the government’s move to repay maturing external debt of $4.8 billion this year.

However, the government is likely to refinance its $2 billion 2025 maturity in 2024 and gradually pay down some of its domestic debt. 

“Budget surpluses will still allow Qatar to transfer new funds to the sovereign Qatar Investment Authority,” the report said.

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