Qatar is expected to set a conservative government budget in the next fiscal year beginning in April, and has not indicated that it plans any further rise in social spending, an International Monetary Fund official said.

The finance minister has said that he will keep capital expenditure at 40 percent of the total expenditure (in the medium term). And they will continue to have a conservative budget, Prasad Ananthakrishnan, the IMF's head of mission to Qatar, told Reuters late on Tuesday.

He was speaking after the IMF held annual consultations with Qatar on its economy.

The world's top liquefied natural gas exporter booked only a modest budget surplus of 2.9 percent of gross domestic product in the 2010/2011 fiscal year as spending soared 24 percent.

Partly in response to unrest seen elsewhere in the Middle East, Qatar hiked basic salaries and social benefits for state civilian employees by 60 percent last September, while military staff received 50-120 percent rises. The IMF estimated social measures would add $1.6 billion (1.0 billion pound) to expenditure in 2011/12.

At this stage, they haven't indicated any new social measures for next fiscal year, Ananthakrishnan said by telephone from Washington.

In its consultation report, the IMF estimated Qatar would post a budget surplus of 7.2 percent of GDP for the current fiscal year. Analysts polled by Reuters in December forecast a surplus of 6.3 percent next fiscal year.

REAL ESTATE SECTOR

In November, Qatar raised $5 billion by issuing sovereign bonds internationally. Ananthakrishnan said the Qatari authorities had not indicated plans for any further sovereign issues to the IMF.

I'm not sure about the amount, but they had the Emiri decree in 2008 that set the limit on borrowing, and to my knowledge they have nearly hit the ceiling. From a sovereign bond perspective, I think they have issued what they want to issue.

But Ananthakrishnan added that a surge of Qatari debt issues could be expected from banks.

There are many banks that are lined up, they have already issued their prospectus and if our calculations are right, at least $20 billion worth of bonds or medium-term notes are going to be issued in the near future depending on the timing from banks.

Ananthakrishnan also said the IMF mission had underlined the need to collect data in Qatar's real estate sector to facilitate risk management by banks, since lending to that sector had been rising rapidly.

We are also encouraging them to develop a corporate governance code for the real estate developers. We feel that such a code would contribute to the prevention of excessive risk-taking in the sector.

A construction frenzy ahead of the 2022 World Cup helped propel annual lending growth to the real estate sector to 95 percent in October, the fastest pace since at least 2008. It slowed to a still-fast 49 percent in December.

At this stage, we don't see any serious real estate bubble building up, because eventually most of the credit that the banks are lending are to public enterprises, Ananthakrishnan said.

But the point is that one doesn't know what plans these enterprises have for the future, how much excess supply in the real estate there is, whether they are bringing any new real estate. These things require greater clarity.

(Editing by Andrew Torchia)