Qatar’s Emir has passed a new law that grants additional powers to the country’s finance ministry, giving it more control over the nation’s purse strings as part of a push to bring overspending departments in line.
Law No. 2 of 2015 is the latest move by Qatar’s leadership to rein in government expenses amid declining revenues and an infrastructure building boom that’s pushed construction costs up to the highest level in the Gulf.
Qatar Minister of Finance Ali Shareef Al Emadi said the new measures aim to “protect public funds,” according to the country’s state news agency.
“The law would boost the efficiency of public spending by tracking income and expenses accurately and continuously,” the minister said.
While Al Emadi did not provide specifics, QNA states that the new law is also aimed at giving the finance department more flexibility to deal with “economic and financial developments” as well as setting “clear boundaries” between government departments.
“Waste, extravagance, mishandling of state funds, lack of respect for the budget, reliance on the availability of money to cover up mistakes are all behaviors that must be disposed of, whether oil prices are high or low.
The new legislation also extends Qatar’s 2014-15 budget to the end of December as the government prepares to move its fiscal year to Jan. 1. The budget has historically ended March 31, but starting in 2016 will mirror businesses and international financial organizations that follow the calendar year.
The Qatar government has routinely overspent its budget in recent years, but still managed to turn a surplus by making conservative assumptions on the amount of revenue it will collect from energy exports.
However, the dramatic drop in the price of oil – which is correlated to the price of natural gas – has eroded government revenues across the Gulf and prompted some economists to predict that Qatar will run its first budget deficit in more than a decade this year.
While Qatar’s vast financial reserves likely mean it can easily cover a financial shortfall for several years, the expected milestone is prompting some to take a closer look at how the country’s finances are measured.
Speaking to Doha News, a locally-based economist who asked not to be named said:
“In the past, there’s been a lack of oversight (of government) spending. This is part of a general push by the Emir to have better control over public spending across the government and make sure that decisions are made through (the) Ministry of Finance.”
The impact of the new law, and how the finance ministry would exercise its new powers, remains to be seen, particularly in the absence of new detailed spending plans for the coming year.
For his part, Al Emadi said the government would “continue its support” of projects and investments that are already planned and scheduled.
None of the reductions have been officially communicated by the government. However, Al Emadi said the new law would “ensure transparency and accountability in the handling of public money.”
While it’s not clear what that will entail, the economist who spoke to Doha News said he is expecting to see the finance ministry release more detailed information about spending trends in the months ahead.