Effectiveness of Project Finance in Wealthy Countries - Research Paper Example

Qatar is an Arab emirate country located in the Middle East and borders Saudi Arabia to the South. The capital city of Qatar is Doha. Qatar covers 11,437 sq. km of which most land is flat, barren and desert, with hot humid climate. It has a population of 1,448,446 of which 75.7 percent of the population is male and 24.3 percent are female. Qatar is endowed with vast deposits of oil, natural gas, and fish. In addition, the country produces some fruits and vegetables, and imports all other foods commodities.

The small Arab country relies heavily on oil and gas revenues. Qatari oil and natural gas reserves are over 15 billion barrels and 26 trillion cubic meters respectively. Oil and gas revenue accounts for over 50 percent of its total GDP and 70 percent of all government revenues. Over 85 percent of all export earnings are from gas and oil. In fact, Qatar is the largest exporter of Liquefied natural gas (LNG). It is also the third largest country after Russia and Iran with largest gas deposits. In addition, Qatar relies heavily on foreign labor.

Since oil and gas were discovered and extraction commenced in the 1950’s, Qatar’s economy has experienced high real gross domestic product growth rate each year. According to Blanchard, the country recorded 16 percent real gross domestic growth in 2010. Qatar is one of the richest countries in the world and has the highest per capita income in the Arab world. The GDP and per capita incomes were $128 billion and $67,000 in 2010 respectively. In addition, Qatari citizens and residents enjoy a higher standard of living as compared to most countries in the world.

The oil and gas sector generated over 70 percent revenues to the exchequer and the government does not levy income tax on all its citizens. According to the CIA, the budget revenues and expenditures were estimated to be $47.32 billion and $31.61 billion respectively in 2010. Qatar has one of the lowest tax rates for foreign investors in the world, a situation that has attracted direct foreign investment. Furthermore, the country can grant tax exceptions for about 12 years.