QATAR - Yousef Bin Hussein Kamal.

The Finance Minister for many years and Minister of Economy & Commerce since March 2006, Kamal on April 2 unveiled the largest budget in Qatar's history, with a generous allocation for infrastructure development and an expectation Qatar's GDP will continue to increase over the next six years. Its highlight is a 20% rise in state spending, after a 44% rise in the 2006/07 budget. Income is to rise 27% to QR 72.47 bn for 2007/08, from QR 56.9 bn for 2006/07, based on strong growth and the outlook for the oil, gas and petrochemicals sectors (see down9QatrEnBasAug27-07).

Kamal is interested in the big picture, creating a sustainable economy regardless of oil price. In April he said: "The budget I announced shows Qatar is always thinking long term. Our plans are for 2012 and beyond - in fact, we have to plan for as far away as 2025".

Doha on July 16 decided to unify its financial regulatory system, thus broadening the international standards championed by the Qatar Financial Centre (QFC) across the emirate. The yet unnamed unified regulator, scheduled to start work in early 2008, will consist of the Central Bank's Banking Supervision Department, the newly formed regulator of Doha's stock market and the QFC, which has since 2005 attracted about 50 international companies. Local banks, brokerages, insurance and asset management firms will have to come into line with a tighter regulatory structure by about 2010.

The move is unusual for a region usually slow to adopt greater transparency, underlining Doha's determination to raise standards so financial firms can compete on the global stage. The new regulator will lead to a rewriting of old commercial and financial codes which are a concern for foreign firms doing business in the GCC area. Phillip Thorpe, CEO of the Qatar Financial Centre Regulatory Authority (QFCRA), says Qatar has taken a reform-minded step which other regional states would find difficult to follow, adding: "The process will be difficult for some firms and I am sure we will have to deal with some cultural issues - but there is the political will to make it happen". Thorpe had a role in the formation of the UK's Financial Services Authority, which in the late 1990s merged 10 regulatory bodies.

Qatar has 25 banks, insurance firms and brokerages, most of which enjoying stellar profits amid the oil boom, making change easier to effect. And tighter regulations standards are already arriving through self-regulation and introduction of Basle-II standards in the banking sector. The QFC, formed in 2005, has lured international names as many of the banks expanding into the region to harness surplus petrodollars have realised they need to put people on the ground across the GCC, not just in Dubai or Bahrain. Banks like Deutsche Bank and Goldman Sachs are opening offices in Doha, hoping to win a share of projects worth $100-130 bn and to manage the wealth of the country, which has one of the world's largest per capita GDPs - in Qatar in 2006 having exceeded $30,000.

Spiralling rent prices and a high cost of living are pushing expatriates to leave Qatar, however, despite Doha promising a demographic boom driven by GDP growth. An unfurnished two-bedroom apartment in 2003 cost QR1,500-2,500/month. This had risen to QR8,400 by mid-2007. Inflation driven by unregulated rents makes all basic commodities expensive. Wealth is in the hands of a small business elite. There is an acute shortage of skills in Qatar.

Kamal in February said inflation could be brought under control. He said Qatar's economy was going through a transitional period, of which inflation was one outcome. He outlined the ways inflation could be brought down to take cash from the market, saying: "We could also reduce the government budget and instead of investing $30 bn a year in the energy sector, spend $10 bn. Inflation would then automatically come down as the number of people coming to Qatar for employment would also go down. Demand would then decrease". For now, however, growth is to continue. Doha's recent pledge to bid for both the 2016 Olympics and the 2018 World Cup was another huge statement of intent.

Qatar is active on the world economic stage. The Qatar Investment Authority (QIA)-backed Delta Two has $2.8 bn stake in J Sainsbury, the UK retailer. It is the latest in a series of international investments by state-backed firms, including the acquisition of London's Chelsea Barracks. In February, the state was named as backer for a $3 bn property development overlooking London's Hyde Park. The QIA is in talks to buy 10% of Airbus' parent Eads, the European aerospace giant. Kamal's diversification strategy is starting to pay dividends.