Oman has reduced its budgeted expenditure for the 2020 fiscal year by RO500m ($1.3bn) as it contends with the economic impact of lowered oil prices.

The sultanate originally estimated revenues of RO10.7bn and spending of RO13.2bn in its state budget, which would have led to a budgetary deficit of RO2.5bn.

The state budget was developed with oil prices estimated at $58 a barrel. Crude values are averaging less than $30 a barrel at present

A financial policy expert at the Ministry of Finance, Khaled bin Saif al-Busaidi, said the state budget was developed with oil prices estimated at $58 a barrel.

Crude values are averaging less than $30 a barrel at present, and Oman expects the severe oil price decline to raise its deficit for 2020, Al-Busaidi said.

He added that the current oil price average would “gravely deepen [Oman’s] budget deficit”.

Spending cuts

Thirteen circulars and directives have been published by the finance ministry to derive spending cuts from the 2020 budget.

The ministry has issued circulars to implement a 5 per cent reduction in allocations approved for the country’s civil, military and security departments, in addition to a 10 per cent cut of approved liquidity for the developmental budget.

The finance ministry recently issued instructions to rationalise spending in government firms, including cuts of 10 per cent or more to operational budgets 

The finance ministry’s approval has to be sought before floating any new projects and tenders or entering into any other financial obligations without prejudice to financial dues of firms or importers partnering with the government. 

The finance ministry also recently issued instructions to rationalise spending in government firms, including cuts of 10 per cent or more to operational budgets and rescheduling of project execution by advancing government priorities.

These measures, Al-Busaidi said, would result in the RO500m spending cuts this year, state-run Oman News Agency reported.