Ministry of Finance: State Budget Forecast to Achieve QR4.3 Billion Surplus

Doha, December 13 (QNA) -The Ministry of Finance has announced that the general budget of the State of Qatar for 2019 will achieve a surplus of QR 4.3 billion, according to budget estimates. The surplus is a result of higher energy prices in international markets along with increasing non-oil revenues. The 2019 budget assumes an average oil price of $55/barrel, compared with $45/barrel in the 2018 budget. Revenue is anticipated to reach QR211.0bn, up 20.5% compared with the budgeted revenue of QR175.1bn in 2018, the Ministry of Finance said in a statement issued this evening. Expected revenues are based on an oil price assumption of $55/barrel. Major Projects are allocated 43.3% of total expenditure. New projects worth QR48bn will be awarded in 2019. QR12bn is allocated over 5 years to develop new housing for nationals. Funds are allocated for the expansion of Hamad International Airport, with a total cost of QR10bn. HH the Amir Sheikh Tamim Bin Hamad Al Thani has issued Law Number (23) of the year 2018, endorsing the State Budget for 2019 that will commence on January 1, 2019. The budget forecasts a surplus of QR4.3bn, the first budget surplus in 3 years. The surplus is a result of higher energy prices in international markets along with increasing non-oil revenues. The 2019 budget assumes an average oil price of $55/barrel, compared with $45/barrel in the 2018 budget. Revenue is anticipated to reach QR211.0bn, up 20.5% compared with the budgeted revenue of QR175.1bn in 2018. Expenditure is set at QR206.7billion, up by 1.7% compared to the QR203.2bn budgeted in 2018. Accordingly, the budget is expected to achieve a surplus of QR4.3bn. Based on directives from HH the Amir Sheikh Tamim Bin Hamad Al Thani, the 2019 budget is designed to achieve efficiency in current expenditure while maintaining the necessary allocations for the completion of major approved projects that contribute to the sustainable development targets of Qatar 2030 Vision. These span economic, social, human and environmental development. The budget also focuses on providing the necessary funds for the development of new housing areas for nationals, enhancing food security projects, and the establishment of infrastructure and facilities in free zones, special economic zones, and industrial and logistics zones. Allocations to Chapter I (Salaries and Wages) have increased by 9.4% to QR57.1billion, compared with QR52.2bn in 2018. This rise is the result of increasing hiring to secure required staff to operate several newly completed projects, especially in the education and health sectors. Hiring also increased in the defence, security and public safety sectors. Budget of the 2019 fiscal year Budget (QAR billion) 2018 2019 % change Total revenue 175.1 211.0 20.5% Total expenditure 203.2 206.7 1.7% Surplus/Deficit -28.1 4.3 2018 Expenditure Details Expenditure (QR billion) 2018 2019 % change Chapter I - Salaries and Wages 52.2 57.1 %9.4 Chapter II - Current Expenditure 53.6 56.1 4.7% Chapter III - Minor Capex 4.5 3.9 %13.3- Chapter IV - Major Projects 92.9 89.6 %3.6- Total Expenditure 203.2 206.7 %1.7 Expenditure allocated to Chapter IV (Major Projects) declined by 3.6% to QR89.6bn, compared with QR92.9bn in 2018. This decline is the result of the completion of some major infrastructure projects. Chapter IV allocations are projected to continue declining gradually during the coming few years, as more projects are completed. Despite the drop in allocations, Chapter IV continued to represent the largest share of expenditure, at 43.3%. The focus continues to be on completing projects in leading sectors including healthcare, education and transportation, along with those related to the hosting of World Cup in 2022. In 2019, new projects with a total cost of QR48bn are expected to be awarded out of a portfolio of committed projects worth QR 421bn. These new projects will boost economic growth in the country, especially in non-oil sectors. Healthcare Sector The allocation for the health sector is QR22.7bn, representing 11.0% of the total expenditure. Major projects to improve health care services include: Expansions in Hamad Medical Corporation facilities National Laboratories premises The completion of new 4 health centres (Al Wajbah, Meither, Qatar University and Alwaab) Commencing construction of 5 new health centres (South of Wakrah, Al Mashaf, Al Saad, Al Khor and Ein Khaled) Education Sector The education sector is allocated QR19.2bn in the budget, representing 9.3% of total expenditure. Major projects in the education sector include: Facilities for the medicine, pharmacology, engineering and law schools at Qatar University Other Qatar University facilities (student housing, new lecture halls and Al Rawdah premises) Expansion in the Community College Ministry of Education headquarters Two new schools for Qatar Academy The establishment of other new schools with a total cost of QR6.8bn over 5 years Infrastructure Projects Infrastructure projects are allocated QR33.0bn, 16.0% of total expenditure. The sectors covered include road, water, electricity and sewerage networks, along with other public facilities. The main infrastructure projects under construction include: Al Bustan Highway Al Rayyan/Dukhan Road Al Khor Coastal Road Al Furousiya Road North Road Wakrah Expressway Wakrah Bypass Lusail Expressway Expansions in the water and electricity networks Development of new housing areas for nationals Housing Areas The 2019 budget includes allocations for the development of new housing areas for nationals, including the provision of roads, water, electricity and sewerage networks. The plan to provide new housing areas for nationals will cost QR12.0bn over 5 years. New land areas will be distributed to nationals gradually after the completion of required infrastructure, according to the approved timetable. Transportation and Communications Sector The Transportation and Communications sector is allocated QR16.4bn, 7.9% of total expenditure in 2019. Most of the allocations will go to the Rail project, Doha Metro, while QR1.0bn was allocated for the expansion of Hamad International Airport as part of a wider plan worth QR10.0bn to enhance the capabilities of the airport to offer the best aviation and cargo services. There are also funds assigned to Qatar Public Transportation Program, which is expected to cost QR3.0bn in 2019-2021. The main transportation projects under construction include: The Rail Doha Metro (allocations of QR12bn) Lusail Light Train Qatar Public Transportation Program Hamad International Airport expansion. Summary of the Ministry of Finance press release on the State's budget Issuing a decision to establish the General Tax Authority No adjustments in the tax on income of the foreign investors share in companies (by 10% of profits) The amendments grant further exemptions to key economic sectors No tax on the income of citizens and residents No taxes on investments in shares and profits Imposing selective taxes on health-damaging goods at the beginning of 2019 VAT will not be imposed in 2019 and its effects are being assessed A set of taxation laws have been issued today including Law number (24) of 2018 on the Income Tax, Law number (25) of 2018 on the Selective Tax. Also, a decision was issued to establish the General Tax Authority. The new tax laws are part of the process of developing Qatars financial system to keep up with international best practices and enhance economic growth and financial stability, due to the importance of the taxation system in financial policies in most countries around the world. The General Tax Authority (GTA) The General Tax Authority has been established as a separate entity, under the supervision of the Ministry of Finance, and will be in charge of the implementation of all tax laws. The GTAs mandate includes: The implementation of all tax laws and setting up all related by laws, procedures and instructions. Reviewing and assessing tax return forms submitted by all establishments and the collection of taxes from subject entities. Representing the State of Qatar in relevant international and regional organizations as well as at international conferences and events. Signing agreements with other countries regarding the prevention of double taxation to encourage economic cooperation and joint investments. Income Tax The Income Tax law of 2018 amends previous income tax laws. The income tax on foreign companies working in Qatar or on the stake of foreign partners in joint ventures remained at the same level, which is a 10% flat rate on profits. The amendments focused on reforming administrative and procedural systems, supporting tax compliance by taxpayers and granting greater flexibility in granting tax exemptions to institutional activities in key economic sectors and economic zones to support growth and economic diversification, thereby encouraging and attracting foreign investment. The law stipulates that the salaries and wages of citizens and residents shall not be subject to any tax. It also grants exemptions for equity shares listed on recognised stock exchange profits of banking deposits and companies working in the agricultural sector and fisheries. Marine and aerial transportation are also exempted under the principal of reciprocity. Selective Tax The Selective Tax law is designed to impose taxes on certain health-damaging goods and it will be implemented by the beginning of 2019. The law includes a 100% tax on tobacco and its products and energy drinks, and a 50% tax on sugary drinks. (QNA)