H.E. Sheikh Abdullah Bin Saoud Al-Thani, Governor of Qatar Central Bank
The governor of Qatar‘s central bank talks about the country’s strategic priorities for the coming two years, and the role the banking and financial sector will play in helping Qatar reach its targets for investment and diversification.
In December 2013, the Qatar Central Bank, Qatar Financial Markets Authority and the Regulatory Authority of Qatar Central Bank launched the regulatory and supervisory strategy for financial markets and services in Qatar. What are the strategic priorities included in the roadmap for 2014-2016?
The Strategic Plan for financial sector regulation has been prepared in line with the National Development Strategy (NDS) 2011-16 to realize the objectives of the Qatar National Vision (QNV) 2030. In this context, the Strategic Plan provides the mission, vision, values and objectives that will underpin a coordinated approach by the three regulatory authorities to strengthen the financial sector and foster stable and robust economic growth. It contains six critical goals: 1. Developing a consistent risk-based micro-prudential framework in line with global regulatory developments and improving disclosure practices. 2. Building a macro-prudential framework in line with international best practice. 3. Strengthening market infrastructure by enhancing the payments and settlements system and by developing the debt market. 4. Enhancing the consumer and investor protection by developing standard and codes of conduct, protecting credit information and raising public awareness and education. 5. Promoting regulatory cooperation among the regulatory authorities and strengthening local and international cooperation. 6. Building human capital through training and professional development initiatives in the regulatory authorities and in the financial sector more broadly.
In achieving the goals of the Strategic Plan, the financial regulatory infrastructure will meet international standards and best practices to provide a conducive and investor friendly environment.
The development of a resilient financial sector will support the economic strategy envisaged in both the NDS 2011-16 and the QNV 2030. At the core of this strategy is the development of a competitive and diversified economy – with less reliance on hydrocarbon revenues – in which the financial sector will have a predominant role. As part of this strategy, significant progress has already been made in developing the financial markets and related infrastructure. Specifically, major steps have been taken to develop deep and liquid debt markets through regular issuance of Treasury bills and government securities. This would lead to the development of a risk-free yield curve that will help in the efficient pricing of financial instruments in the market as well as help banks manage their liquidity. In particular, it would help in the development of a corporate debt market in Qatar, which would be an important platform for the corporate sector in mobilizing resources for investment in the non-hydrocarbon sector. Moreover, the three regulatory agencies are working together to harmonize and strengthen regulatory oversight and safeguard consumer and investor protection. These actions along with the development of a resilient, safe and efficient payments, clearing and settlements system will help promote financial stability and develop a resilient financial sector.
Qatar will largely finance its USD 100 billion of infrastructure projects by 2020 through government bonds. What makes Qatari government bonds an attractive purchase today, and what can be done to improve their attractiveness as these projects begin to reach maturity?
The attractiveness of Qatari government bonds lies on the strong macroeconomic fundamentals and the robust growth outlook supported by economic diversification and a large public investment program. As the world’s largest exporter of LNG, Qatar has turned into an important global financial investor, donor, and labor importer. The country enjoys a strong credit rating and has a very favorable tax regime. Cumulatively, these factors have resulted in the country enjoying a high level of international investor confidence as demonstrated by the recent upgrade of Qatar Exchange to MSCI Emerging Market.
Qatar’s Islamic and conventional debt market has gained importance over the years. Regular auctions of government bonds, expansion of maturities, and trading in the secondary market -as they are listed in the Qatar Exchange- are expected to facilitate the emergence of a proper yield curve, which will help in the efficient pricing of financial instruments in the market.