The illegal siege of Qatar, which began almost a year ago, had many fearing that the country would go under in terms of financial stability. However, things could not have been any more different.

Almost a year down the line, Qatar’s policies at the face of the illegal siege have proven to be the right ones.

The International Monetary Fund (IMF) too acknowledged this, saying considerable buffers and sound macroeconomic policies helped Doha absorb shocks from lower hydrocarbon prices and the diplomatic rift, according to Gulf Times.

A report issued by the IMF revealed that Qatar’s growth performance remained resilient and able to deal with the direct economic and financial impact of the siege. The near-term growth outlook is broadly positive and GDP growth of 2.6% is projected for 2018.

After concluding Article IV consultation with Qatar, directors concurred that Qatar has ample fiscal space to continue with gradual fiscal consolidation to ensure sufficient saving of the hydrocarbon wealth for future generations, reported The Peninsula.

“The underlying fiscal position continues to improve. The fiscal deficit is estimated to have narrowed to about 6% of GDP in 2017 from 9.2% in 2016. The deficit has been financed by a combination of domestic and external financing,” the report said. 

Qatar’s public debt, estimated at 54% of GDP at the end of 2017, remains sustainable, the report said, adding that the current account is improving in the context of increased oil and gas.

Qatar’s banking sector remains healthy overall reflecting high asset quality and strong capitalisation, the report said, according to Qatar Tribune.

However, the IMF observed that loan concentration in the real estate sector amid softening property prices warrants vigilance.

Inflation in the country remains subdued, primarily due to lower rental prices, the IMF said.

The report, however, said that inflation is expected to peak at 3.9% in 2018 as the impact of the value-added tax being introduced during the second half of 2018 would mostly be felt in that year before easing to 2.2% in the medium term.

The executive board also welcomed the government’s efforts to enhance economic diversification and promote development of Qatar's private sector, noting reform efforts across labour law, privatisation, special economic zones, and increased foreign ownership limits.

Qatar's currency peg to the US dollar continues to serve the country well providing a clear and credible monetary anchor, the report said. The IMF, however, underscored that the exchange rate regime should be reviewed periodically to ensure that it remains appropriate as the economy moves toward a more diversified export structure.