With the escalating challenges triggered by the Coronavirus (COVID-19) pandemic and uncertainties dominating economic, social and political environments, the global economy is struggling to manage the lockdown of economic activities around the world. According to the International Monetary Fund (IMF), COVID-19 has fueled a global recession that is anticipated to be the worst since the Great Depression. Recent Fitch Ratings also note that world economic activity is expected to decline by 1.9% in 2020 with US GDP down by 3.3%, the eurozone down by 4.2% and the UK down by 3.9%.
Countries around the world have been responding vigorously to curb the COVID-19 spread and mitigate social and economic consequences. The State of Qatar is at the forefront of countries that is swiftly responding to the evolving difficulties by introducing a series of measures to both safeguard the health of its citizens and residents as well as protecting its economy and wealth.
In support of the economy and private sector, His Highness Sheikh Tamim Bin Hamad Al Thani, Amir of the State of Qatar, directed a USD $23 billion stimulus package to the private sector in addition to directing government funds to increase investments on the stock exchange by over USD $2 billion. This complements the series of prudent measures that were previously announced to bring some relief to the private sector, particularly for the sectors and industries most hard hit, such as the hospitality, tourism retail sectors as well as SMEs. Qatar Central Bank is injecting banks with additional liquidity and exempting companies from certain payments in order to minimise financial burdens. Banks across the country are also contributing their support by postponing the payment of loan installments, waiving/slashing a number of fees, and widening access to free-of-charge online payment services and hiking purchase limits for contactless cards to support the nation's precautionary measures.
Additionally, Prime Minister and Minister of Interior HE Sheikh Khalid bin Khalifa bin Abdulaziz al Thani allocated guarantees to local banks worth QAR 3 billion. This comes as part of the support package for granting soft loans without commissions or fees for the affected companies to support salaries and rents through guarantees issued by Qatar Development Bank (QDB). The guarantees will be issued for a period of up to 3 years to cover bank financing of beneficiary companies, and a tenor period of up to 2 years, in addition to a grace period of up to one year. The new "National Guarantee" programme along with the credit and payment facilities extends support to more than 400 SMEs in Qatar.
During this crisis, Qatar Financial Centre (QFC) remains committed to pursuing its role as one of the world's leading and fastest growing onshore business and financial centres, functioning as a gateway for attracting foreign investments into Qatar, promoting and achieving the Nation's economic diversification strategy, and bolstering the private sector. Equally important is retaining investments, addressing the concerns of firms and sustaining the wider business community amidst this crisis, as the QFC platform is home to more than 900 registered firms and continues to expand. This commitment stems from the QFC's overarching goal of ensuring that firms and small businesses in Qatar can remain competitive in view of the forecasted economic slowdown. To that end, the QFC has recently announced new measures that are designed to offer tax relief to its firms. This includes deadline extensions for tax filings without incurring any late filing penalties, in addition to reducing the rate of the charge due on the late payment of tax (late payment charge) to 0% from 1 March 2020 to 31 August 2020. The updated rates ensure that any QFC firm who extends their filing due date will not suffer any late payment charges until 31 August 2020, should their tax due also be paid after the payment due date. These measures complement the recent decision announced by the General Tax Authority to postpone the payment of tax until 30 June 2020. Besides, the QFC announced the waiver of the Concessionary Rate Charge due on qualifying QFC entities that elect for the 0% Concessionary Rate under Part 15 of the Tax Regulations if the election is made during the year 2020, in addition to deadline extensions for filing audited annual financial statements by a period of two months. The QFC also continues to offer full support to its firms during COVID-19, including a 24/7, multilingual call centre where clients can continue to relay their licensing and post-licensing queries, as well as other business servicing questions.
Furthermore, the QFC has also strengthened its digitalization processes for firms' incorporation, ensuring that all automated processes are approved swiftly, from the point where a firm submits a business case to when a firm is licensed on the QFC platform and receiving post licensing services such as immigration, banking and relocation support.
Backed by this significant support of the QFC alongside the wider business community, Qatar's economy has been well-equipped to navigate turbulent conditions, withstand challenges and emerge stronger. Over the years, Qatar has been at the forefront in showcasing its distinct perseverance and ability to adapt and thrive amidst challenging circumstances, turning it into a lucrative opportunity by accelerating its digital and technological advancement, which complements Qatar National Vision 2030. Amidst social distancing guidelines, remote work conditions, and business lockdowns; digital services have been the adequate channel to maintain the ease and continuity of business. Accordingly, it is no surprise that Qatar is witnessing the acceleration of financial technologies (Fintech) to facilitate online payment. QPAY, a leading Fintech provider in Qatar and QFC firm, discounted prices by 50% to help Qatari SMEs accept electronic payments instead of cash which may be contaminated. The Governor of Qatar Central Bank (QCB), His Excellency Sheikh Abdullah bin Saoud Al Thani, recently launched the "Qatar Mobile Payment System" (QMP), which provides a new and safe method for immediate electronic payment. This online payment drive was followed as well by Qatar Islamic Bank (QIB), which launched its digital wallet "mPay".
Qatar's quick measures to combat the impacts of COVID-19 were lauded by many world renowned organisations, including the International Monetary Fund (IMF,) which confirmed that Qatar is one of the first countries in the region that has already introduced targeted measures to combat the social and economic impact of COVID-19. These measures secured stable ratings and relatively high economic projections in the region, such as from S&P Global Ratings, which affirmed its long and short-term foreign and local currency sovereign credit ratings for Qatar at 'AA-/A-1+'. Similarly, the Institute of International Finance (IIF) confirmed that Qatar's inflation-adjusted economic expansion will be better than the world and the Middle East and North Africa (MENA) average.
These relatively positive projections are in fact the result of Qatar's forward-looking vision and the effective management of the challenges it has faced previously, from the 2008 global recession to the geopolitical challenges of 2017. Qatar has continued to both demonstrate its resilience and the value of its effective economic policies. State and nation-wide efforts to manage the impact of the COVID-19 crisis should see Qatar emerge stronger, yet again.