IMF commends Qatar's economic policy

The International Monetary Fund (IMF) said the State of Qatar had a bright economic outlook due to high oil prices but is at risk from inflation, and one way to contain this pressure would be to loosen the peg between the riyal and dollar.

IMF's regular review of Qatar’s economy specified that its dollar peg had served it well so far, however it was time to consider other options.

"A few directors suggested that consideration be given to moving to a more flexible exchange rate regime to help curb inflationary pressures," the review explained. It also noted that the riyal appeared to be in line with fundamentals on foreign exchange markets.

Buoyant oil earnings have helped Qatar’s economic diversification into fields such as petrochemicals, financial services and tourism, while driving growth of 10 percent in 2006 with a strong performance expected this year as well.

However, growth was accompanied by inflation which reached around 12 percent this year. "Although Qatar’s medium-term prospects are very favourable, high inflation remains a concern and its reduction should be a priority," the IMF recommended.

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