Qatar plans to set limits on personal loans based on an individual’s income to address the deepening debt crisis in the country. According to the just-unveiled Qatar National Development Strategy 2011-2016, three quarters of Qatari families are in debt, with most burdened by large loans exceeding QR250,000. The five-year plan targets to halve the number of Qatari families in debt by 2016. “There is a weak financial culture among families overall, and in some cases this results in taking out loans without fully understanding the costs of repayment. Although Qatar provides free healthcare and education, data suggest an increasing number of families are incurring debt to cover costs of private sector service providers,” says the five-year plan document. The report has identified the most vulnerable families as those headed by women, especially divorced and widowed women and families with retired and unemployed heads as well as those headed by employed people with lower education levels. “A thorough campaign against indebtedness will require legislative action, including setting limits on maximum allowable loans based on an individual’s income,” said the report. Analysts point out that the proposal to set limits on personal loans based on the borrower’s income was a welcome step in view of the fact that much of the blame for the debt crisis has been attributed to the liberal lending by banks. Cashing on the economic boom in the country, banks had been offering personal loans up to 84 times a borrower’s salary. The Qatar Central Bank (QCB) has been blamed for allowing banks to dispense loans without any limits or restrictions. The proposed restrictions will force banks to assess the financial situation of a potential borrower and his ability to repay, before disbursing the loans. It will make it difficult for people to borrow beyond their financial capability. The five-year plan has given equal emphasis on raising public awareness on the issue. The strategy will begin with a pre-marriage awareness and counselling programme intended “to curb the desire to live above one’s means.” The programme will also include financial advisory service that offers legal advice on loan rates and payments, that will be easily accessible to families. Since data support the desire for Qataris to seek private sector healthcare and education— two sources of potentially large financial expenditure— the government will enact a comprehensive health insurance system for families and provide an education allowance or vouchers for private education.

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