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Mon 30 Mar 2009 12:02 PM

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Qatar set to project 2009-10 budget deficit

LNG exporter to base its annual budget on oil price of $40 - advisory council official.

OPEC member Qatar is likely to post a slight deficit in the next fiscal year and will base its annual budget on an oil price of $40 a barrel, an official at the Gulf state's Advisory Council said on Monday.States across the world's biggest oil-exporting region are expecting to record fiscal deficits this year after oil prices slumped from a peak of almost $150 a barrel last July to just over $50 now.

"We expect a slight deficit, one that is acceptable in light of the current economic crisis," Mohammed Ajaj Al Kubaisi, rapporteur of the financial and economic committee of Qatar's Advisory Council told Reuters.

Qatar's fiscal year begins on April 1.

As the global financial crisis brings an end to a regional economic boom, most Gulf states, including top oil exporter Saudi Arabia, have pledged to keep public spending high to carry their economies through the downturn.

During a multi-year oil price rally that began in 2002, Qatar and its neighbours had adopted a conservative forecast for revenue from oil, their biggest source of income.

Last year, Qatar, the world's biggest exporter of liquefied natural gas (LNG), based its oil revenue on a price of $55 per barrel and said it expected a $2bn surplus by generating more revenue from oil sales on higher prices.

Qatar's next budget still requires the approval of Qatar's Emir before it takes effect, Kubaisi said.

In January, Qatar's deputy prime minister said the upcoming budget would base oil revenue on an oil price of $35 a barrel.

At the time, Abdullah Bin Hamad Al Attiyah, who is also the Qatari oil minister, said the Gulf state was not expecting to post a deficit.

Qatar is less exposed to the downturn in crude prices because LNG exports are based on a variety of long-term contract prices, analysts have said.

The Gulf state's economy is likely to sustain growth of seven to nine percent this year after expanding 16 percent in real terms last year, its central bank governor said last week. (Reuters)