As oil prices now hover around a fi ve-and-a-half year low with the possibility of dropping to $40 a barrel, Qatar may see budget defi cit of $5bn-$10bn in 2015 if crude remains at $50 for the entire year, but massive sovereign wealth fund (SWF) assets provide the country with suf- fi cient cushion to support capital spending for infrastructure, according to Amwal. Assuming $50 a barrel, Qatar may see budget defi cit, but it is very small compared to the estimated $115bn worth SWF assets; at $57; it will be breakeven; Afa Boran, Amwal head of asset management, told reporters here in the presence of Amwal CEO Fahmi Alghussein. Even at lower oil prices, he said Amwal does not expect current expenditure (excluding capital spending) to be immediately aff ected as the Gulf Co-operation Council (GCC) countries have “signifi cant” savings to weather a period of low oil prices. Expecting oil prices could go down as low as $40 a barrel; he, however, said crude could not stay at that lower levels for long and may eventually stabilise at $70. The current low oil prices have been due to an appreciating dollar and increased production, which largely came from the US, where average cost of production is about $50 and that of shale oil is about $75, he said. Even prior to the drop in oil price, Amwal believed that the $100 level was too high and would eventually normalise. “We do believe that the current $50 a barrel is likely below oil’s fair value” because long term analysis adjusting for the dollar volatility and time value of money suggest oil price is below long term average, Boran said. Highlighting that oil producers are not earning much (in the current scenario); he said either the price has to go up or production has to be curtailed for the market to realign itself. On the impact of low oil prices on the GCC as a whole; he said spending will be likely more controlled going forward. “Qatar is in a better position” because the projected government revenue (at $50 oil price) is still higher than the non-capital expenditure, he said, in an apparent reference to a large Gulf economy, where sovereign revenues are projected to have impacted both capital and non-capital spending. Even at the conservative oil price assumption of $65 a barrel, Qatar had projected a budget surplus of QR7.3bn in the current fi nancial year. Overall, spending is the key driver of economic growth in the GCC region and both the budget and current account surpluses as well as SWF assets are “healthy” to meet planned spending, Boran said.