UPDATE 2-Qatar budget spending to jump 18 pct this year - QNA

Mon Apr 1, 2013 10:30am EDT

* Infrastructure programme slower to start than many expected

* Budget suggests Qatar now moving to implement it

* Surplus may fall but likely to stay comfortable

* Budget again assumes low oil price of $65

* Finance minister sees improvement in world economy

By Regan Doherty and Martin Dokoupil

DOHA/DUBAI, April 1 (Reuters) - Qatar plans to boost government spending by 18 percent to 210.6 billion riyals ($57.8 billion) in the 2013/14 fiscal year that began on Monday, the QNA state news agency quoted Finance and Economy Minister Youssef Kamal as saying.

Analysts said the planned spending increase suggested that after a slower start than many businessmen had expected, the wealthy Gulf state was moving to implement a massive infrastructure building programme in preparation to host the 2022 World Cup soccer tournament.

"It shows how serious the country is about racheting up infrastructure development to get ready for 2022," said Farah Ahmed Hersi, senior economist at Masraf al Rayan bank in Doha.

Simon Williams, HSBC's chief economist for the Gulf, said: "Budgeting in Qatar should be taken as a statement of intent rather than a detailed financial plan.

"This budget makes clear that Qatar not only intends to drive spending upward, it has the means to do so."

The emir of the tiny, gas-rich state on Monday approved a budget with revenues of 218.1 billion riyals and a planned surplus of 7.4 billion, well down from a surplus of 27.7 billion riyals it pencilled in for the previous fiscal year, QNA said.

"The surplus decrease is understandable. When external accounts are that healthy, there is a natural tendency to increase spending, and in doing so, you dig into your surplus. But that's okay - 7 billion riyals is still quite healthy," Hersi said.

Williams said he was not concerned by the anticipated surplus decrease. "The real challenge for them is to execute what's planned."

Qatar's infrastructure building plans envisage spending about $140 billion through 2022 on a rail system, a new airport, a seaport, and hundreds of kilometres of major new roads in addition to stadiums for the soccer tournament.

The building plans, which would tax the skills of a much larger country, risk causing bottlenecks, waste and a jump of inflation if they are not managed smoothly.

Kamal said in a statement carried by QNA that the new budget was based on a number of considerations: "The first of which is that there are indications that the world economy is on its way to improvement, despite the fact that these expectations are marred with uncertainty."

The government decided to keep the oil price which its budgets assume unchanged at $65 per barrel, Kamal said. Brent crude oil is currently well above $100.

Economic growth in the world's top exporter of liquefied natural gas is expected to be more than 4 percent this year, driven by the non-hydrocarbon sector, especially services and construction, Kamal said.

Qatar's state budget leaped into a large surplus of 94.6 billion riyals in the July-September period, the second quarter of its 2012/13 fiscal year, equivalent to 53.9 percent of gross domestic product in that period, preliminary central bank data show.

Analysts polled by Reuters in January forecast Qatar's budget surplus would be 9.1 percent of GDP for the whole 2012/13 fiscal year, narrowing to 7.5 percent in 2013/14.