According to Qatar Central Bank’s data, the Sukuk’s maturity periods varied as follows: QR1.5 billion (an addition to an existing issuance) with a maturity date of January 16, 2029, and a yield of 4.5%, and QR1.5 billion (an addition to an existing issuance) with a maturity date of August 24, 2030, and a yield of 4.5%.

In a post on X (formerly Twitter), the bank clarified that total bids for the Sukuk reached approximately QR8 billion. The central financial institution also unveiled support measures for banks in response to Iranian attacks that severely weakened the Gulf’s third-largest economy.

The central bank will now offer unlimited local currency repurchase facilities against eligible securities held by local banks in order to ensure deep liquidity in the local market. This new facility offers maturities of up to three months, enabling Qatari banks to manage cash flow with greater certainty amid the ongoing volatility.

The industry’s senior executives, while interacting with The Banker, also said that Qatar Central Bank would reduce the reserve requirement on deposits from 4.5% to 3.5%, releasing further liquidity into the system. The central bank has been quizzing lenders about their liquidity in past weeks.

Qatar’s economy has been among the worst affected by the ongoing Middle East conflict. An attack from Iran on the Gulf country’s Ras Laffan liquefied natural gas (LNG) production hub knocked out 17% of the nation’s energy export capacity, in addition to creating an estimated annual revenue loss worth USD 20 billion, which may span for the next three to five years.

However, Qatar Central Bank has been proactive in ensuring the banking and finance industry doesn’t feel the heat. It has already permitted banks to offer borrowers the option to defer loan principal and interest payments for a period of up to three months, in accordance with lenders’ existing internal policies and supervisory guidance.

Analysis from S&P Global Ratings projected Qatar and Bahrain as the most vulnerable in the Gulf region to external outflows of foreign and local funding. However, for Qatar, the government has a proven record of supporting both the Islamic banking and the wider finance sector.

“Liquidity continues to be strong, capital levels significantly exceed regulatory requirements, and provisioning provides strong coverage against credit risk. Banks continue to hold substantial liquidity in both domestic and foreign currency, and resources are sufficient to meet customer demand, support normal market activity, and meet any short-term funding pressures under stressed conditions,” QCB said while reacting to the S&P report.

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The IMF’s consultation report, released on November 21, indicates that Qatar’s economic prospects in the medium term appear positive, with an estimated output growth rate of approximately 1.75% per annum during 2023-2025.

The report further states that the non-hydrocarbon sector is expected to grow at a rate of 2.75%, driven by domestic demand, which will contribute to the country’s medium-term expansion.

The IMF report said, “Qatar’s economic growth has normalised in 2023 following the World Cup-driven boom. Medium-term growth is set to increase to around 5 per cent per annum supported by LNG production expansion.”

According to a recent report, Qatar’s efforts to achieve its National Vision 2030 – which aims to ensure sustainable development by the end of the decade – are expected to yield positive results.

The report also indicates that inflation in Qatar is expected to moderate to 2% this year, while the fiscal and current accounts are projected to remain in surpluses in the medium term.

Moreover, the Planning and Statistics Authority of Qatar revealed that inflation rose 2.52% in October on an annual basis, largely due to increased expenses related to communication, recreation, and food.

However, inflation has since moderated following the tightening of monetary policy in line with the US Federal Reserve, which is consistent with the country’s currency peg to the US dollar.

“Broad fiscal discipline amid sizable hydrocarbon windfalls in 2022–23 has strengthened the fiscal position significantly and is commendable. Continued fiscal prudence is expected under the upcoming 2024 budget,” IMF noted.

The International Monetary Fund has stated that the Qatar Central Bank has effectively maintained both price and financial stability.

Additionally, the banks in Qatar are in good shape, although the non-performing loan ratio has increased due to pandemic-related restructured loans turning non-performing.

“The QCB has refined macroprudential measures to reduce further risks associated with banks’ external asset-liability mismatches, especially those of short maturities, which is welcome,” IMF added.

The agency has emphasised the importance of continued diligence in further strengthening the banking sector, especially in an environment of “higher-for-longer” interest rates.

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In line with its proposal, the Governor of Qatar Central Bank Sheikh Abdulla bin Saoud al-Thani, told the media, “The QCB is actively working on developing strategies that will allow [industry] players to easily [take part in various] fintech initiatives and products that are currently on the horizon. We are formulating the QCB’s approach to fintech by taking lessons from a number of major global initiatives in this regard.”

Blockchain is a disruptive technology embraced by the global banking system. The technology is quite effective for payment transactions, back-office operations, risk management and record management. It is reported that Qatar Central Bank is actively working to adopt blockchain solutions and other emerging financial technologies.

The bank’s second strategic plan is to establish policies to strengthen venture capital financing and drive SME development. Part of the strategy which is focused  on SMEs is monitored through the Qatar Development Bank, media reports said,

Previously, the Qatar Development Bank had developed a myriad of innovative programmes to provide, short, medium and long-term capital for SMEs in the country. It seeks to improve credit access for SMEs in line with Qatar Central Bank’s proposal to adopt blockchain and other disruptive technologies, media reports said.

In fact, Qatar Central Bank is keen to explore distributed ledger technology use cases and its impact on businesses in the country.

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The QFC said in a statement that the ban will cover “anything of value that acts as a substitute for currency, that can be digitally traded or transferred and can be used for payment or investment purposes.” The ban prohibits exchange between virtual assets and fiat currencies, exchange between one or more types of virtual assets, transfer of virtual assets, administration of trading services and issuance of virtual assets. 

The exact reason for the QFC’s cryptocurrency ban is not mentioned in the statement. However, digital forms of securities or other types of financial instruments which are regulated by the Regulatory Authority, the Qatar Central Bank or the Qatar Financial Markets Authority are legally permitted in the country, the local media reported. 

Owing to anti-money laundering laws and actions, cryptocurrency firms are shutting down in many countries. In 2018, the Qatar Central Bank sent a statement to all banks operating in the country that trading in bitcoin is is not allowed. 

Furthermore, the statement noted that cryptocurrency is volatile and is prone to financial crimes as well as electronic hacking. It emphasised that these risks could result in loss of value as there are no guarantors or assets. In fact, Qatar had declined Venezuela’s proposal for the country to invest in El Petro cryptocurrency project in 2018. 

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