Qatar Central Bank comfortable with liquidity levels

HE Sheikh Abdullah Bin Saud Al Thani, Governor of Qatar Central Bank (QCB) said the liquidity position, which has significantly improved in the first quarter of 2009, continues to strengthen with very good levels. The Qatari banking sector has succeeded in overcoming the tightened liquidity conditions since the second quarter of 2008 thanks to the direct and indirect measures being implemented by QCB, Sheikh Abdullah told Qatar News Agency (QNA) . While the sector's asset base has expanded by 27% over the past three years, the deposit base growth has helped the banks to finance the higher demand for credit, without having a negative impact on liquidity, explained QCB Governor. The growth rate for banks' assets was primarily the result of the investment in risk-free or low risk assets such as the government bonds, he added. A lot of risks have been reduced when the Qatari government bought the local equity portfolios of banks in 2009, explained Sheikh Abdullah. The preventive, proactive step to increase the capital has improved the capital adequacy ratios (CAR) even in the midst of a global economic slowdown, he said. QCB is monitoring the situation closely and will not hesitate to take the necessary enforcement actions, he continued. HE QCB Governor spoke of the solutions and visions reached about the closure of Islamic branches of commercial banks at the end of the month. The governor said that QCB gave clear and flexible orders to banks in order not to cause any confusion or harm to banks or their clients. HE said that after the end of the month QCB will continue to manage what is left of Islamic assets in a private portfolio in the banks' financial center. The governor said that Islamic assets may be transferred to Islamic banks if QCB wanted to, and added that banks are covered regarding a timely payment of Islamic deposits without any breach in their terms or durations. Concerning QCB intervention this year more than once to change interest rates, HE the governor said that the recent reduction in the percentage of interest rates came under the pressure of international developments and domestic considerations. Such developments and considerations, says HE, include but are not limited to the introduction of reduced interest rates by several central banks in developed countries in addition to the appropriate domestic economic environment that enhances investment spending and credit activity in the banking sector. HE Sheikh Abdullah bin Saud Al Thani expected that a securities firm would launch in July to complement QCB work. HE said that the needed procedures are taken to establish the firm. HE spoke of the reflections of the world economic crisis on Qatar's financial stability and said that the world economic crisis would only affect Qatar on the short term with a minimal effect on the long term. While Sheikh Abdullah bin Saud Al Thani stressed that Qatari economy is flexible enough to face global crises especially with its strong financial foundations, HE said that the recent decline in commodities' prices on the international level would help stabilize inflation rates at a low level. Doha, December 10 (QNA) - Regarding inflation rates in the near future especially after the considerable raise in citizens' salaries, HE the governor said that inflation in Qatar has stood at 2% during 2011, while it was 2.1% on annual basis in consumer prices in August 2011 unlike a shrinkage of 2.1% in August 2010. HE the governor said that the recent raise in the salaries of Qatari officials will not affect inflation rates, while pointing to IMF expectations that inflation in 2011 would be about 2.4%. Lessons learned from the recent world economic crisis have been interpreted by QCB in 2011-2016 strategy that paves the way for Qatar National Vision 2030, said HE  adding that some of these lessons have already been included in the economic and monetary policy of Qatar even as the crisis is coming to end. HE QCB governor said that capitals were increased and assets were purchased as a preventive measure in 2009, 2010 and 2011 to enhance the strength, liquidity and flexibility of the banking system. QCB has redirected its monetary transactions in a response to the rapid changes in financial conditions, said HE, pointing to the bank's establishment of emergency liquidity window in the wake of Lehman Brothers crisis in September 2008 to enhance the confidence of participants in the market. HE Sheikh Abdullah bin Saud Al Thani said that due to domestic considerations and global economic realities, QCB has reduced the average of main interest rates last year taking into consideration the fact that Qatar has been one of the most growing economies in the world over the past few years. QCB has been exerting all possible efforts and has taken several measures this year to build a strong banking system characterized by precaution and flexibility at the same time, stressed HE the governor. Such measures include, but are not limited to, the closure of Islamic branches of commercial banks, imposing restrictions on consumer loans against salary in a different way for each of citizens and residents in addition to the restrictions imposed on real estate financing, and revising allocations criteria. HE said that all of these measures have been implemented according to the most recent international standards and practices. In addition, QCB advises banks on the significance of having a stronger banking system with adequate capital that complies with the requirements of BASEL III, HE said adding that QCB has already started the necessary measures in this regard. evels