Budget for 2015 will reduce spending on projects and social programmes
The Omani government is planning a substantially lower budget for 2015, after oil prices dropped below $75 a barrel in November.
Minor projects and social services are expected to be affected by the budget cuts. Omans breakeven price was $101.6 a barrel in 2014 and is predicted to be $107.5 a barrel in 2015, according to the Washington-based IMF. The sultanate exports more than 900,000 barrels a day (b/d) of oil, making up 50 per cent of its GDP.
There has been fast-paced spending on infrastructure and welfare due to the surplus, says a consultant working in the country. Nothing has been affected yet, but the government is preparing people for a drop in the budget.
Omans Consultative Assembly approved a proposal on 23 November to budget based on a predicted oil price set at $80 a barrel. This implies a RO550m ($1.4bn) decrease in forecast revenues, and the assembly recommended budget cuts of 5 per cent, according to the Oman News Agency.
Muscat is also looking into reforming taxes, taxing expatriate remissions and increasing mineral royalties to balance its budget. It is also focusing on the diversification of its economy and the employment of Omanis in the private sector.
Oman awarded a record $2.4bn of oil and gas engineering, procurement and construction (EPC) contracts in 2014, and recorded heavy investment in power, water and transport infrastructure while oil prices were more than $100 a barrel. Non-essential schemes are likely to be dropped or trimmed in 2015, while hydrocarbons projects should go ahead as planned.