TAMING THE CYCLE

Qatar 2019 | FINANCE | INTERVIEW

The Central Bank is taking the lead not only in funding exciting new green economy initiatives, but in introducing far more transparency, accountability, and efficiency to general lending practices.

Sheikh Abdulla  Bin Saoud Al-Thani
BIOGRAPHY
Sheikh Abdulla Bin Saoud Al-Thani was appointed Governor of Qatar Central Bank in 2006, having begun his career in that institution in 1981. He was Deputy Governor from 1990-2001 and subsequently left to serve as Chairman of the State Audit Bureau from 2001-2006. He has also served as Chairman of the Qatar Financial Center Regulatory Authority since 2012 and as Chairman of Qatar Financial Markets Authority. Chairman of the Qatar Development Bank, he is also a member of the board of directors of the Supreme Council for Economic Affairs and Investment. He served before as the chairman of the board of directors of the Gulf Monetary Council in 2014.

What are your priorities for your new five-year term?

The global economic and financial front has raised new challenges and opportunities, which have influenced central banks all over the world. In fact, they have changed the future of central banks. Two priorities are leading our five-year agenda, strengthening our monetary policy framework as well as financial stability, and fostering the advancement of the financial and banking infrastructure. Henceforth, aiming to achieve Qatar's ambition to be a leading financial hub in the region, and in order to face the challenges, three main strategies were designed considering new policies, regulations, and tools. Strategy wise, from the sectorial level, the Financial Sector Regulatory Strategy for 2017-2022 was released after the economic blockade in June 2017. This focuses on guiding the state of Qatar in its future endeavors towards building a sound and resilient financial sector to ensure sustainable economic growth in alignment with Qatar National Vision 2030 objectives. The strategy is also helping the banking and financial sectors support the country as it prepares to host the 2022 World Cup with things like the payment system platform. Given the globalization of financial technology, we have designed a Financial Technology Strategy in cooperation with Qatar Development Bank (QDB) to create a "fintech hub" in the country, which is critical for our future success. Awareness that the ecosystem will be more important than ever encouraged us to create a financial inclusion and literacy strategy, which will seek to broaden the financial sector through supply and demand-side measures linking banks' service development to customs awareness and protection. A key element of this strategy is promoting the SME sector, which will also be consistent with the Qatar National Development Strategy (QNDS 2) objective of economic diversification and promoting greater private participation.

What green economy plans does the Qatar Central Bank have in mind?

The focus on green financing has spread rapidly throughout the world, and leading central banks are taking significant initiatives to address issues related to such financing. In Qatar, we have also taken initiatives to support green financing. Commercial banks have launched innovative credit products like 'green mortgages,' which reward environmentally conscious new homebuyers with concessional financing terms. Relatedly, Qatar Development Bank (QDB) is also proactive in funding SMEs in agriculture, livestock, and fisheries with the twin objectives of empowering local businesses and achieving self-sufficiency. The Second Strategic Plan for Financial Sector Regulation provides a well-defined roadmap to promote sustainable investment and green finance. This includes, among others, devising incentives for firms to promote green financing, enhancing cooperation with QDB to foster economic diversification, and exploring the possibility of issuing green bonds.

With the implementation of International Financial Reporting Standards (IFRS-9), which improvements are you seeing in the Qatar financial sector?

IFRS-9 is designed to bring more transparency, accountability, and efficiency to financial institutions across the world through high-quality accounting criteria. Given the forward-looking nature of this regulation, this will make banks proactive in establishing and building up their allowance for possible future credit losses. Not only will this further improve their credit risk assessment skills, but additionally improve data quality and ensure better pricing of loans. This will enable them to better manage their profitability, as identification and corrective measures can be taken well in advance. In sum, IFRS-9 reporting will enhance the overall health and resilience of the banking sector and better equip them to address sharp and sudden downturns in economic cycles. ?