Qatar’s banks may struggle to finance $130 billion of infrastructure projects if a worsening European debt crisis prompts foreign banks to pull back their business in the country, the nation’s planning office said.
Escalation in the euro region’s debt crisis may spark a “flight from risk” and create “less-favorable conditions” for project financing, the General Secretariat for Development Planning said in a June report. The agency pointed to a 0.4 percent annual drop in deposits at banks in April as loans expanded 35 percent. Corporate deposits fell 12 percent.
Qatar is set to build a $35 billion rail and metro line, a $7.4 billion port, new roads and stadiums before hosting the 2022 soccer World Cup. As local banks try to keep up with credit demand, their loan-to-deposit ratio reached 118 percent in May, the highest in the Gulf Cooperation Council and up from 93 percent a year earlier, Bloomberg News calculations based on central bank data show. The spread between Qatar’s borrowing costs and U.S. rates widened more than 30 percent in 2012.
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