The Qatar Central Bank's (QCB) international reserves constituted 624% of the currency issued in November 2021, much higher than the mandated 100%, indicating the central bank's creditworthiness, according to the Qatar Economic Outlook.
The level of total international reserves and foreign currency liquidity amounted to QR209.6bn in November 2021, equivalent to $57.6bn, of which about 72.9% are official reserves, the Planning and Statistics Authority said in its outlook.
During the period November 2020 to November 2021, the monetary base increased by an average of 14%, as this increase derived from an average increase of 4.4 percentage points in the issued currency, as well as from an increase in commercial bank deposits (others) with the central bank by 2.4 percentage points (not including required reserve or excess reserve).
The measures taken by the QCB to confront the financial challenges faced the Qatari economy during the period (2016 through November 2021), including the repercussions of fluctuations in oil and gas prices, the Gulf crisis, and measures to contain Covid-19, led to an increase in its balance sheet by about QR82bn during the same period, equivalent to $22.5bn, including $11.8bn since the onset of the Covid-19 (January 2020).
The report said the management of domestic liquidity during 2020 was formulated on an increase in the monetary base by 28.6%, through an increase in the currency issued by 8.1 percentage points, and an increase in commercial bank deposits in the central bank by 20.5 percentage points.
In regard to the measures taken by the QCB to deal with the repercussions of Covid-19 during April 2020-November 2021, they are relatively different from the measures taken during the blockade in terms of both size and rate of change, as the QCB increased its deposits with local banks during the first quarter of 2020 as a precautionary measure to counteract any pressure in local liquidity.
However, at the same time, it increased its investments in foreign bonds and treasury bills at the expense of reducing its balances with foreign banks for the purpose of maintaining official reserves in good standing.
The QCB continued to use these procedures as required; for example, during the first eleven months of 2021, the central bank raised its investments in foreign bonds and treasury bills from QR85.9bn in January 2021 to QR105.7bn in November 2021, in return for reducing its balances with foreign banks from QR48.5bn in January 2021 to QR29.8bn in November 2021.
"As is often the case, it may be more profitable to invest in bonds and treasury bills rather than keep investments as deposits at low interest rates," the outlook said.
As for the increase in the currency issued, it may in turn reflect the increase in the value of gold reserves resulting from the increase in the revaluation account, a consequence of the increase in international gold prices.
As regards the increase in the deposits of commercial banks, these consist of “excess reserves” and “other reserves” that are usually deposited at the QCB to benefit from its interest payment while at the same time having them available to use to pay their dues when required.