DOHA/KHOBAR: Qatar will raise the salaries of government employees next year in a rare spending hike by a Gulf state at a time when low oil and gas prices are weighing on state finances. Some Qataris’ basic salaries will double, under a law to be passed in January that was published in Al Sharq newspaper late on Sunday. Salaries for non-Qataris remain the same. Gas-rich Qatar is the wealthiest country in the world per capita and its roughly 300,000 citizens enjoy free healthcare and education.
But plummeting energy prices since mid-2014 have forced the country to rein in lavish public spending at a time when it is having to fund a $200 billion infrastructure upgrade for the 2022 football World Cup. State subsidies have been slashed and jobs cut at state institutions, including more than 1,000 foreign workers let go in 2015 at Qatar Petroleum. Cutbacks have hit Qatar’s vast migrant workforce the hardest but locals – for whom affluence and stellar economic growth have been the norm – have also been affected.
Some government employees have been annoyed by being told to fly economy class, share offices and cancel journal subscriptions. Qataris on social media yesterday applauded the law as supporting citizens through difficult economic times. Neighboring Saudi Arabia in September cut ministers’ salaries by 20 percent in one of the most drastic measures yet by the energy-rich kingdom which racked up a record budget deficit of nearly $100 billion last year. In 2011, Qatar raised state employees’ salaries by 60 percent.
Meanwhile, the Saudi government said yesterday it will raise municipal fees for services such as business licensing to increase revenues as its oil income sags because of low global crude prices. The new fees, which also include charges for operating telecommunications towers and banks’ automated teller machines, will take effect on Dec 9, the Ministry of Municipal and Rural Affairs said.
But in a sign that the government wants to limit the financial impact on companies, many of which are struggling with an economic slowdown, the fees were well below ceilings approved by the cabinet in August. Also, the ministry postponed implementation of increases in some fees, such as charges for collecting garbage and approving real estate development plans. It was not clear when these might go ahead.
Investment bank NCB Capital estimated the impact on industries’ net income this year would range from 0.02 percent for healthcare and 0.07 percent for banks to 0.79 percent for consumer staples and 1.36 percent for petrol stations. Telecommunications operator Etihad Etisalat (Mobily) will see an impact of 3.3 percent, it calculated. Seeking to cut a budget deficit that totalled $98 billion last year, the government has been coming up with a range of new ways to raise revenues. In August, the cabinet approved proposals to increase visa charges and traffic fines. – Agencies