The Central Bank of Qatar is allowing banks to offer payment moratoriums to borrowers, cutting reserves, and providing unlimited liquidity through repos, as Gulf authorities scramble to contain the impact of a war now in its fifth week. The measures include the option to defer principal and interest payments for up to three months for customers affected by "current conditions," the central bank announced on Monday. At the same time, it will offer an "unlimited amount of repurchase operations in Qatari riyals against eligible securities held by banks" and introduce a term repo tool with a duration of up to three months. Furthermore, the central bank is reducing the mandatory reserve requirement on deposits from 4.5% to 3.5% to boost liquidity.
Strong banking system, but rising risks
The central bank stated that liquidity levels remain strong in both local and foreign currency, capital adequacy ratios significantly exceed regulatory limits, and provisional reserves sufficiently cover credit risk.
Heavy blows to energy and aviation
According to Bloomberg, Qatar is already suffering severe impacts from Tehran's retaliation as the conflict drags on. The Ras Laffan unit, the world's largest liquefied natural gas facility, suffered serious damage and may require up to five years for full restoration. Qatar Airways, the region's second-largest airline after Emirates, has canceled thousands of flights since late February. Additionally, it has contacted aircraft leasing companies for potential deferrals or reductions in lease payments, citing the ongoing war and the impact of airspace closures.
Regional response and ripple effects
Doha's move comes two weeks after a support package announced by the Central Bank of the United Arab Emirates to bolster the banking system and liquidity. The UAE has taken the hardest hit from Tehran's retaliation among Gulf nations, with damage to energy infrastructure, airports, and buildings in residential and commercial areas caused by projectiles and interception debris.
Return to "pandemic-style" measures
The Central Bank of Qatar is the first in the region to allow three-month loan suspensions. The move is reminiscent of the emergency support programs of the 2020–2021 period, when during the pandemic, regulators such as those in the UAE and Saudi Arabia allowed payment moratoriums to protect borrowers from sudden income losses.
Gulf markets in collapse
Stock indices across the Gulf have retreated sharply as investors limit their exposure to emerging markets. Qatar's QE index has recorded a drop of 8% since the start of the war. Dubai's benchmark index remains more than 15% lower, while the Abu Dhabi index is recording losses close to 9%.
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