Qatar may cut rates to save on World Cup
By timebandit •
Qatar may cut rates to save on World Cup spending |
| Qatar, host of the 2022 World Cup, may cut its benchmark interest rate by at least another half percentage point as the country seeks to trim the cost of building nine stadiums, roads and 40,000 hotel rooms, analysts said. The Qatar Central Bank (QCB) this month reduced its overnight lending rate and repurchase rate to 4.5% from 5%. The overnight deposit rate was cut a quarter point to 0.75%. The move aims to boost credit for spending on infrastructure and real-estate projects, the central bank said. Lower commodity costs and concern that US and European growth is faltering may keep inflation in check globally, allowing Qatar to lower borrowing costs even as the government projects economic growth of 16% this year. “There’s room for rates to come down and I believe they will come down more in Qatar given that the US rates will remain low for the next two years,” said Giyas Gokkent, chief economist at the National Bank of Abu Dhabi. “The global inflation outlook has moderated markedly in past week or two.” The interest-rate cut followed US Federal Reserve chairman Ben S Bernanke’s August 9 pledge to keep interest rates near zero through at least mid-2013. Qatar’s riyal is pegged to the dollar at a rate of $0.27. “There still remains room to reduce the lending rates from the current 4.5% by another 50 basis points, as inflationary pressure remains muted and credit growth is being directed toward productive areas and not speculative,” Monica Malik, economist at EFG-Hermes UAE, said in an e-mail. Unlike the US, which had its credit rating lowered by Standard & Poor’s to AA+ from AAA on August 5 amid rising debt and sluggish growth, Qatar projects a budget surplus of QR22.3bn this fiscal year. The International Monetary Fund projects Qatar will have the fastest growing economy in the world for the second straight year in 2011. The nation is rated AA, the third-highest investment grade, at S&P. Qatar’s $81bn economy will expand 20% this year, the IMF said in December. Non-hydrocarbon gross domestic product forecast to grow 9.5% in 2011, the least in five years, down from 30.6% in 2007, the IMF said. Qatar promised FIFA, world soccer’s governing body, to more than double hotel and apartment rooms to 84,000 and build a $25bn rail and metro network. Private-sector loans grew 16.3% in the first half, Gokkent said. Qatar has supported its banks through the financial crisis with cash injections and the purchase of real-estate portfolios. Consumer prices rose at an average rate of 1.7% in the first half after the country experienced deflation for most of 2010. Rent, fuel and power prices continue to decline. “The issue here is not liquidity - the issue here is confidence,” said Mohamed Ali Yasin, chief investment officer for CAPM Investment in Abu Dhabi. “Qatar wants to encourage investors to put this money into treasuries, bonds and equities because that’s how you help the markets through a time of volatility.” Bloomberg |
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TC, yeah right. Let the expats do it and hide the truth to the locals. just what happened to other countries. happily they were able to get out before the locals discovered the truth....
recent study showed World could face another major Economic Crisis, worse than the previous one!
spot on fubar, there is a much bigger underlying cause than the interest rates, plus the Oil is on the way down now.. more cuts and freeze of pay rises again?
The article fails to mention that the Qatari stock market is down by about 6% year to date, and shows no signs of strengthening.It's going to take more than some interest rate cuts to inject confidence into this economy.
Qatar will pull this easily, provided that no qataris are involved in entire process :)
"Rent, fuel and power prices continue to decline."
Hahahahahahaah!!!