Qatar Central Bank Allows Loan Deferrals as Iran War Drags On

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(Bloomberg) — Qatar’s central bank is allowing lenders to offer borrowers payment deferrals, cutting reserve requirements and providing unlimited repo liquidity as Gulf policymakers race to respond to fallouts from the Iran war that’s now in its fifth week. 

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The measures include the option to defer loan principal and interest payments for up to three months for customers affected by “current circumstances”, the central bank said on Monday. It will also provide “an unlimited amount of Qatari riyal repurchase facilities against eligible securities held by banks” and introduce a term repo facility with maturities up to three months. 

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The Qatari central bank will reduce the reserve requirement on deposits from 4.5% to 3.5% to release additional liquidity. 

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The central bank said that liquidity levels are robust in both Qatari riyal and foreign currency, capital ratios substantially exceed regulatory minimums and provisioning buffers provide ample cover against credit risk. 

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Qatar is facing fallouts from Tehran’s retaliation as the US-Israeli war on Iran has stretched beyond a month. The Ras Laffan plant, the world’s largest liquefied natural gas plant, was severely damaged and may take up to five years to repair. Qatar Airways, the region’s second-largest operator behind Emirates, has cancelled thousands of flights since the end of February. It has contacted several aircraft lessors to potentially defer or reduce rental payments, citing the ongoing war and the impact of airspace closures.

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Doha’s move comes two weeks after the United Arab Emirates’ central bank rolled out a resilience package to support the banking sector and boost liquidity and lending capacity. The UAE has borne the brunt of retaliation from Tehran among Gulf states with energy infrastructure, airports as well as buildings in residential and commercial districts damaged by projectiles and debris from interceptions.

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For more, read: UAE Central Bank Supports Lenders as Iran War Continues

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QCB is the first central bank in the region to have permitted banks to allow three-months loan deferrals. The provision echoes similar emergency forbearance programs deployed across the Gulf during the pandemic years of 2020–2021, when regulators including the UAE central bank and the Saudi central bank allowed payment suspensions to cushion borrowers against income shocks.

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Gulf equity benchmarks have retreated sharply, and investors trimmed risk across emerging markets. Qatar’s QE Index has fallen 8% since the start of the war. Dubai’s benchmark index remains more than 15% lower since the war began, while Abu Dhabi’s is down nearly 9%. 

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