(MENAFN- Gulf Times) IMF has urged Qatar to remain vigilant about "overheating risks" in both real estate and consumer prices.
Highlighting the need to tackle inflation IMF mission chief (Qatar) Martin Sommer said, "Policymakers in Qatar pay a lot of attention to this issue. The Ministry of Finance has taken steps to smooth the time profile of public investments to avoid overheating. The Logistics Committee addresses various bottlenecks. The recent drop in global commodity prices and the strong dollar are helping to reduce consumer price inflation."
Going forward, Sommer said it was important to remain vigilant about overheating risks. This applies both to consumer prices and real estate prices. In particular, real estate valuations appear to be on the upper end of what could be justified by Qatar's economic strength.
"In this context, additional steps could be taken to ensure adequate supply of land and affordable housing. Consideration could also be given to raising real estate transaction fees, which are low by international standards.
"This way, policymakers would reduce the risk of speculative pressures by cash investors in the real estate market. The fees could be differentiated so that first-time real estate buyers pay very little, but short-term investors are penalised," Sommer added.
In its 2015 country report, IMF said, "Policymakers in Qatar should slow public sector spending, if inflation accelerates in the country. Consumer price inflation is contained, although real estate prices have grown quickly in Qatar. CPI inflation has eased in recent months, as rent increases stabilised and tradables inflation fell."
"Imposing rent controls could prove counterproductive. In case of excessive credit growth, further macro-prudential measures and liquidity withdrawals should be deployed," IMF said.
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