Is Qatar feeling the pinch?

Qatar’s sovereign wealth fund has repatriated $20 billion to ease the effects of sanctions im­posed on the country in its dispute with a quartet of Arab countries led by Saudi Arabia.

Doha’s move is seen as a re­sponse to the severe consequenc­es on its economy, despite its de­nials that it is in financial distress.

Qatari Finance Minister Ali Sha­reef al-Emadi told London’s Fi­nancial Times: “Qatar Investment Authority (QIA) deposits were be­ing used to create a ‘buffer’ and provide liquidity in the banking system after the gas-rich state suf­fered capital outflows of more than $30 billion.”

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt sev­ered diplomatic and economic ties with Qatar in early June after accus­ing Doha of supporting extremist groups at the expense of their se­curity.

“We are not liquidating any­thing. What we have done is taken some of our liquidity from outside to inside,” Emadi told the Finan­cial Times.

“This is through the Ministry of Finance and the QIA, which is very normal in this type of situa­tion,” Emadi said, adding that the steps were pre-emptive and pre­cautionary.

The QIA, which is estimated to have $300 billion in assets under management, reduced its stakes in Tiffany & Co, Credit Suisse and Russian energy firm Rosneft. Emadi said the changes were not related to the Gulf dispute but a part of the fund’s investment strategy.

The Qatar Central Bank said the ramifications on the country’s finances had been severe. The Doha government injected ap­proximately $40 billion — 23% of its GDP — into its economy in the first two months of the crisis. The breakdown in relations resulted in the outflow of approximately $7.5 billion in foreign customer depos­its and $15 billion in foreign inter­bank deposits and borrowings.

 

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