Muscat to boost capital spending

10 January 2003
Economy Minister Ahmed bin Abdulnabi Macki announced on 6 January preliminary details of an expansionary budget for 2003. The budget deficit is forecast to increase by 5 per cent to RO 400 million ($1,025 million) as expenditure is set to rise to RO 3,000 million ($7,692 million). Revenue - based on an average oil price of $20 a barrel, compared to $18 a barrel in the sixth five-year plan - is also expected to rise by 4 per cent to RO 2,600 million ($6,667 million).

The bulk of the extra spending is earmarked for investment in Petroleum Development Oman (PDO)and a range of gas-based industries. The government has increased its funding for PDO, which produces more than 90 per cent of the country's hydrocarbons, by 8 per cent to RO 248 million ($636 million) in 2003. PDO is planning to embark on a heavy programme of investment to boost production of crude oil which has slumped by 10 per cent to 750,000 barrels a day over the last 18 months (MEED 13:12:02, Cover Story).

Macki said the government would also consider tapping the international markets in 2003 in order to raise additional funds. Bankers expect that this will come in the form of a five-year Eurobond valued at around RO 150 million ($385 million). The bond could come to market as early as the second half of the year.

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