Doha’s latest suggestion, that housing costs are put to one side when deciding whether it will meet the GCC single currency criteria, is troubling. It suggests the emirate is more keen to ignore the problem than tackle it.

Finance Minister Yousuf Hussain Kamal set an inflation target of about 5 per cent by the end of the year, and says that action is being taken to address the country’s economic problems.

There is no doubt that the country is enjoying economic growth, but it is more important to ensure that growth is sustainable.

A plan to soak up excess liquidity through the sale of government bonds is a positive step, but its impact will be small. Large-scale investment plans and the award of pay rises to government employees to keep pace with the overheated economy will undermine such moves. And if money supply growth continues to outpace GDP growth, as it did in 2007, inflation will only increase.

All this means Doha has a problem in meeting the entry criteria for the GCC single currency, which requires that inflation must be no more than 2 per cent above the GCC average. With other states having inflation between 2.6 and 8 per cent, Qatar will clearly fail.

To get around this, the Qatari government is calling for housing inflation to be ignored.

But this plea should be rejected. Fudging the figures is not the answer. The correct course is for Doha to take tougher action to limit inflation. This includes currency revaluation, restricting government spending, and taking stronger action on housing inflation. Or it can abandon plans to enter the single currency by 2010.