Effectiveness of Project finance in wealthy countries - Research Paper Example

Qatari oil and natural gas reserves are over 15 billion barrels and 26 trillion cubic metres respectively. Oil and gas revenue account 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 labour. 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 rate in 20102. 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 income was $128 billion and $67,000 in 2010 respectively. In addition, Qatari citizens and residents enjoy higher standard of living as compared to most countries in the world. 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 CIA, the budget revenues and expenditures were estimated to be $47.32 billion and $31.61 billion respectively in 20103. Qatar has one of the lowest tax rates in the world, a situation that has attracted direct foreign investment. Furthermore, the country can grant tax exception for about 12 years. Although economic growth and development is largely attributed to proceeds from huge deposits of oil and gas, the government has developed political, social, economic policies that promoted high levels of governance and transparency; reduced business process bureaucracies; and improve political stability, making it one of the stable Arab states in spite of political turmoil in neighboring Arab states.

Economist, the World Bank and Transparency international have