Growing public investment in Qatar's health care and education

 

In recent years Qatar’s leaders have faced some difficult choices in terms of public spending as a result of the continued downturn in oil and gas prices since 2014, followed by the economic blockade by neighbouring countries. Despite facing declining revenue, public spending continued on infrastructure mega-projects initiated for the 2022 FIFA World Cup as well as on schemes that have a wider social significance, such as new schools, health centres, university buildings and housing developments for Qataris.

Budget for 2020

Despite its recent challenges, Qatar’s budget for 2020 had a spending target of some QR210.5bn ($57.8bn), the highest since its 2015 budget of QR218.4bn ($59.9m), a spending pledge that was made just a few months after global oil prices had started to fall steeply in December 2014. For the second consecutive year, the 2020 budget predicted a surplus, albeit a modest one of QR500m ($137.2m) after factoring in an average oil price of $55, down from an expected surplus of QR4.4bn ($1.2bn) the year before. The main areas of expenditure in the government’s budget statement were municipal and environment (QR28.9bn, $7.9bn), health care (QR22.6bn, $6.2bn), and education (QR22.1bn, $6.1bn). Additionally, according to the 2020 budget statement, major projects are expected to comprise 43% of total expenditure, with plans to award QR11.5bn ($3.2bn) to new projects in 2020. The budget statement also revealed that the Sharq crossing linking Ras Abu Aboud with West Bay and Lusail and its related tunnel structure was planned to be completed 2024.

Sharq Crossing

The Sharq Crossing master plan was created by Spain’s Santiago Calatrava, an architect and engineer, in 2013. The strategy’s aim is to replace the original idea of connecting the airport area and the financial district of West Bay by tunnel, with the construction of three bridges, which descend into a connecting tunnel. Short tunnels onshore will allow each bridge to emerge offshore before descending beneath the sea to connect to the main road tunnel. This approach allows an uninterrupted coastal zone to connect districts of Qatar, while also enabling ships to pass over the central section of the crossing above the tunnel. The bridges connecting Ras Abu Aboud and Lusail have low profiles, in contrast to the crossing from the tunnel to West Bay, which is crowned with a high arch. Above the traffic of the West Bay Bridge, pedestrians will be able to walk from Corniche Park to a viewing area in the middle of the bay. The design also includes a funicular cable car traversing the arch, which is 125-metres high at its apex.

Although the Sharq Crossing is eye-catching and ambitious, the government is keen to underline the economic benefits of this new addition to Doha’s skyline. In December 2019 the Public Works Authority (Ashghal) held a workshop for Qatari construction companies to assist them in creating partnerships with international engineering, procurement and construction businesses, to help local firms place bids in the Sharq Crossing could be submitted in the first quarter of 2020, with construction expected to begin by the third quarter of 2020. The scheme offers local construction firms that have worked on 2022 FIFA World Cup projects a chance to secure new contracts.

Mega-Project Spending

According to estimates by Qatar National Bank (QNB), the budget for the Sharq Crossing is some $8bn. The project is only one component of a boom in government spending that fulfils the objectives of Qatar National Vision 2030, the country’s strategic plan for the decade ahead. QNB calculates that the budget also includes $5bn on 2022 FIFA World Cup stadia, to be completed by end-2020, and $11bn on the Bul Hanine oilfield development, which is scheduled for completion in 2021. QNB expects to see $25bn spent on Ashghal’s expressway programme, $18.1bn on Ashghal’s local roads and drainage projects, and $25bn on the first phase of Hamad International Airport’s expansion, all of which are scheduled to be finished by 2022. Beyond the 2022 FIFA World Cup, QNB expects the major ongoing projects to expand Hamad Port, at an estimated cost of $9.4bn, and build the $45bn Lusail mixed-use development to be completed by 2025. In 2026 QNB anticipates that the $44bn final link in Qatar’s integrated rail network will commence operations, and a potential connection to the GCC rail network to Doha Metro and Lusail Tram – which began operating in 2019 and 2020, respectively – will be completed. QNB estimates the combined budget for these ongoing projects is $190.5bn. In addition to these infrastructure projects, state-owned Qatar Petroleum and international partners are making significant investments to expand liquefied natural gas and petrochemicals production, with mega-projects set to be completed through to 2027.

Revenue & Surplus

The Ministry of Finance (MoF) makes the country’s budget announcements. However, the statements themselves are forward-looking and do not include records of actual performance against previous targets. This can make it challenging to equate the spending in budget statements. It is also difficult to discern whether each year’s spending totals for sectors such as education represent new money or ongoing projects that take a number of years to complete. There can be substantial margins between budgeted and actual income and spending.

In 2016 MoF data revealed that Qatar earned QR14.9bn ($4.1bn) more than it expected, but also spent QR25.1bn ($6.9bn) more than it had planned. The 2016 budget was the first budget in 15 years that a deficit had been forecast, but its prediction of a QR46.5bn ($12.8bn) shortfall proved to be short of the actual QR50.8bn ($13.9bn) deficit recorded. In December 2016 the MoF released its budget for 2017, the year that the economic blockade commenced. Its anticipated revenue of QR170.1bn ($46.7bn) were higher than the actual earnings of QR163bn ($44.8bn), while it spent QR203.3bn ($55.8bn), rather than the QR198.4bn ($54.4bn) outlined in the budget. This meant that the anticipated deficit of QR28.3bn ($7.8bn) became an actual shortfall of QR40.3bn ($11bn). However, spending restraint and better than expected earnings have helped the authorities bridge this gap. The 2018 budget predicted a deficit of QR28.1bn ($7.7bn), but managed to achieve a surplus of some QR15bn ($4.1bn), with revenues of QR207bn ($56.8bn), compared to the forecast QR175.1bn ($48.1bn), while actual spending was some QR10.4bn ($2.9bn) lower than the budgeted spending of QR203.2bn ($55.8bn). As of early 2020 MoF data for 2019 suggested a higher-than-anticipated surplus. The predicted surplus in 2019 was QR4.3bn ($1.2bn) and after nine months it had already reached QR11.2bn ($3.1bn). The IMF pointed out that with 15 years of budget surpluses behind it, and approximately $300bn in its sovereign wealth fund, Qatar is well placed to ride out the fluctuations it has experienced in recent years, although sustained lower global oil and gas prices remain a cause for concern.

Social Spending

The government has consistently supported education and health in its budget statements. From 2016 to 2019 spending on health ranged from QR20.5bn ($5.63bn) to QR22.7bn ($6.23bn), and climbed to QR22.6bn ($6.20bn) in 2020, when it represented 11% of the total. In the same four budgets the education allocation was QR19bn-20.6bn ($5.2bn-5.7bn), and QR22.1bn ($6.1bn) in 2020, when it was equivalent to 10.5% of the total.

In December 2015 it was reported that the health budget for the coming year included funds for Sidra Medical and Research Centre, Hamad General Hospital, and Hamad Medical City, and also included QR850m ($233.3m) for five new health centres and other health care-related projects. Meanwhile, the budget for education in 2016 included expansion projects at Qatar Foundation and Qatar University, such as campuses for the colleges of engineering, law and medicine, and a new laboratory. It also reported funding for 18 new schools and six kindergartens. Budget reports for 2017 included many of the same schemes as well as additional health centres and schools. The same is true of reports on the 2018 budget, which stated that new schools and clinics were being built as part of five-year plans, with budgets of QR6.8bn ($1.9bn) and QR2.9bn ($796m), respectively.

The 2020 budget announcement explained that staffing these new facilities partly accounts for consecutive increases in wages allocations, from QR52.2bn ($14.3bn) in 2018 to QR57.1bn ($15.7bn) in 2019 and QR59bn ($16.2bn) in 2020. MoF figures show actual spending on public sector wages decreased from QR59.2bn ($16.3bn) in 2016 to QR53.1bn ($14.6bn) in 2017, followed by an increase to QR55.7bn ($15.3bn) in 2018, when the actual wage bill was QR3.5bn ($960.6m) higher than forecast. Despite the discrepancies between planned spending and actual expenditure, there has nevertheless been notable progress in major socio-economic indicators.

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