‘Social curse' of huge personal debt raises worries in wealthy Qatar

Credit cards on the limit, huge bank borrowings and a struggle to repay loans: These are the personal debt problems of some Qataris despite the Gulf state's reputation for fabulous wealth.

Generous government salaries and free healthcare, funded by vast natural gas reserves in a country with only about 300,000 citizens, do not always translate into healthy bank balances for ordinary Qataris.

Instead, they can come under intense social pressure to live way beyond their means, spending lavishly on everything from the latest smart phones and designer fashions to family weddings. Now their problems are deepening as diving global energy prices mean even the Qatari welfare state is becoming less generous. Many are borrowing enormous sums from local banks to finance lifestyles they cannot afford, according to a study by Qatar University.

"The idea of Qataris being a small, lucky, happy few - it's a myth," said Laurent Lambert, of the university's Social and Economic Survey Research Institute. "Many do not have the income to match the lifestyle and a small percentage are significantly poor by local standards and struggling to make ends meet." Widespread personal debt, while familiar throughout the Gulf where loosely-regulated banks and extravagant living are commonplace, does not yet appear to threaten Qatar's overall financial system.

Of the 75 per cent of Qatari families in debt - most owe more than 250,000 riyals ($68,700), according to a 2014 Qatar National Development Strategy report - only a handful default on their loan payments, an offence punishable by prison.

But recent layoffs of some state employees and petrol price increases - reforms hastened by the sinking energy market - have refocused attention on indebtedness and the problems it could present to social cohesion if citizens start to press their relatives and the government heavily for help.

While Qatar has a total population of 2.4 million, most are foreign workers who have less access to the cheap loans available in a country where a conventional banking system operates alongside - but separately from - Islamic financial institutions.

Likened to a "social curse" by Qatari commentators and a "fever spreading from house to house", over-indebtedness among the much smaller local population is a raising national concern.

Radio talk shows air interviews with distressed civil servants who complain of becoming mired in debt after borrowing from banks without understanding the costs of repayment.

Part of the problem, some Qataris say, is that the country's economic boom during the era of high energy prices that lasted until mid-2014 rapidly pushed up standards of living - and expectations of what it means to be both wealthy and successful.