Qatar's Finance Minister on Upcoming Islamic Bond Issuance

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00:00You know, one of the things that we've been talking about in the run-up to this conference

00:03is just how resilient the region has been economically, despite the many obvious external

00:09shocks and also some of the internal shocks as well. When you talk about, you know, heightened

00:14geopolitical tensions and so forth. How would you say Qatar's economy has weathered those storms?

00:20Actually, Qatar economy have done very well. The first half results, 3.4 percent, you know, growth.

00:275.1 percent came from non-hydrocarbon. So basically the non-hydrocarbon is driving the growth, you know,

00:33for the economy. And this is in line with Qatar National Development Strategy 3, where we are

00:38going to focus more in the diversification of the economy. And we expect the non-hydrocarbon sector

00:44to grow by average 4 percent for the next five years. IMF expectations even better, you know,

00:51but for the overall economy at 4.1 percent average for the next five years. And again, you know,

00:58I mean, it's going to be driven basically for the non-hydrocarbon. Having said this, still LNG,

01:03we are big in the LNG. Of course. Qatar, you know, plans to expand the energy production by almost 85 percent

01:10in a phased manner over the next five years, which is going to make Qatar responsible for 25 percent

01:16of the supplies of the world LNG, you know, by 2030. Okay. So, yes, we are making the progress,

01:24you know, also in the LNG area, but at the same time, you know, our focus in the non-hydrocarbon

01:29sectors. So what does the split look like by 2030 of oil versus non-oil then, if LNG is going to grow

01:36so much? Today, the non-oil is higher than the oil in terms of contribution, around 60 percent.

01:42By 2030, because of the, again, you know, I mean, the expansion is going to happen in the oil,

01:47we should be around 50-50, you know, I mean, but definitely we are growing in both areas. You

01:54know, I think this is the main story. And we believe LNG is very important. It's going to be

01:58the most important, you know, transit energy for the world in the medium and to long term. So it's

02:03going to be there for some time and it's going to be a transit energy to net zero. So this is something

02:09we're focusing on. Yeah. In terms of the non-hydrocarbon, the sectors we're focusing on is

02:14tourism, logistics, and we have benefited from a world-class World Cup, you know, 2022. We have

02:21built the best infrastructure, you know, and one of the best infrastructures in the world,

02:26you know, and we built a very strong brand for Qatar, you know, with the 2022. This is helping us

02:32now to grow the tourism sector, logistics, technology, manufacturing, and again, we're

02:39going to be, you know, education, health, again, it's going to be also on our radars.

02:43Was some of that momentum derailed in the summer with the war, Iran-Israel in June, with the attack

02:49on Doha that took place? Was there an impact to tourism and to growth?

02:52No, nothing. I mean, no impact there. I mean, and, you know, I mean, it's just an unfortunate

02:57events, you know, these ones. And we are living in this geopolitics for many years. Qatar has

03:03withered, you know, very tough environments in the past, you know, and given even even to the

03:09during during COVID years. And we have came stronger, you know, from these ones. Nothing,

03:14no changes to our plans, no change to our growth stories. Actually, IMF have upgraded the growth

03:20forecast for Qatar and for the region as a whole. You know, so this gives you, I mean, an indication

03:25that how resilient, you know, the economy of the region as well as Qatar.

03:29Yeah. So it's interesting because Qatar is actually running a deficit this year. This

03:33is a strange phenomenon for Qatar because historically you've enjoyed huge surpluses. First of all,

03:40do you think this is going to be a feature going forwards or is this year just a one off?

03:45Yes. I mean, we are very conservative when we set our budget. We take a very low oil price,

03:50you know, to set the budget on. And also, you know, I mean, it's very important for us

03:55that we continue to invest in the economy. So so this is the main reason for this. So having,

04:01you know, I mean, it was it is actually, to be honest, it's a very small, you know,

04:05deficit, 13 billion reais, around four billion dollars. So, I mean, it's not it's not significant.

04:10And don't forget for the last three, four years, we have been doing excellent surpluses. So but,

04:16you know, I think having a small deficit, there is nothing wrong with it. And

04:20and already we have a long view on the fiscal, you know, itself. We have a fiscal policy framework

04:26that works in the medium term, which decides in how the country deal with deficits, surpluses,

04:32even surpluses, how where it goes, you know, like how much of it goes to the central bank,

04:37how much of it goes to Qatar Investment Authority and how much of it we use it for,

04:42you know, like a stability fund for, you know, many for managing budgets, deficits like this year.

04:47Yeah. And Qatar has come to the market this year with with a bond. What is the outlook

04:52for borrowing over the next 12 months?

04:54Yes. I mean, we plan to go to the market again. This time is going to be a sukuk.

04:59You know, this is what we plan to do. We have not done sukuk for many years.

05:02And there is a huge appetite for sukuk, you know, in the region.

05:05So we plan within the next, I would say, two weeks, you know, three weeks,

05:09we are going to be going out in the market.

05:11You know, Qatar enjoys the highest rating in the region. And, you know,

05:15I think there is a huge appetite for Qatar issuance. Always we get heavy subscriptions.

05:22You know, we don't need to do big subscriptions, you know, because, you know,

05:25we don't really need so much funding. And to be honest, debt issuance is not only to deal with deficit,

05:31but it's part of our debt management, you know, program, you know,

05:34which is we need to build the benchmark and the yield curve for our issuance.

05:39We didn't go to the market for like, you know, four years, we disconnected from the market.

05:44And last year we did the green bond, which was the first green bond in the region.

05:48And this year we've done, you know, conventional one on last February.

05:53And we're looking to a sukuk, a small sukuk issuance.

05:56And how important is it, do you think, how important do you think it is to have this portfolio of bond issuance

06:03for liquidity and for, you know, attracting investment into Qatar from a capital markets perspective?

06:10Yeah, it's very important. It's part of our, you know, tools to our debt management program.

06:16And again, you know, I mean, we have done extremely well in terms of like managing the debt to GDP.

06:20You know, we went down from 58% in 2020 to 41% today.

06:27And this gave us the upgrade by the three rating agencies last year to AA.

06:31So we are only two notches down from a AAA country.

06:35So, you know, it's very important for us to continue.

06:39Our strategy, you know, that issue was mainly smaller issuance, more frequent, you know.

06:45And we'll continue even with surpluses because this is, you know, a program we want to continue.

06:50And again, even we want to do local debt issuance, we're talking to the Qatar Central Bank

06:56to have, you know, more active capital market, you know, in Qatar itself, based in Qatar real.

07:01Yeah.

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