Qatar injects money in local banks to offset deposits decline

CAIRO – 22 August 2017: The Qatari government has reportedly deposited $6.9 billion in local banks to offset impact of withdrawal of foreign deposits, UAE-based Sky News Arabia reported on Tuesday.

Qatar’s foreign deposits continued to decline in July as it fell eight percent to record $43 billion, Qatar Central Bank (QCB) announced on Monday.

To protect the banking sector, local Qatari banks have been reportedly asked to shift to international markets for funding, according to Bloomberg.

Being heavily dependent on foreign funds, the Qatari banking system was the first sector to be negatively influenced with some Gulf firms and individuals tended to pull their deposits after four Arab states cut their diplomatic ties with Doha on June 5.

Few days after the boycott announcement, GCC countries reportedly ordered their banks to halt transactions with Qatari banks.

Saudi Arabia, UAE and Bahrain were reported to have withdrawn $16 billion of short-term deposits from Qatari banks.

This has led to a sharp drop in deposits from non-residents of Qatar in 18 banks by 7.6 percent to QAR 170.6 billion ($47 billion) in June from a month earlier, according to QCB data.

After it was hit by an outflow of money due to sanctions, local deposits in Qatari banks shrank 1.8 percent from the previous month in June, according to official data.

In July, Doha's sovereign wealth fund was reported to have deposited over $10 billion in local banks.