Deficit will be funded by external borrowing and drawing down on reserves
Oman plans to run a budget deficit of RO3bn ($7.8bn) in 2017, which is equivalent to 35 per cent of government revenues and 12 per cent of GDP.
When releasing details of the budget, the Ministry of Finance said: The states general budget has been affected significantly by the decline of oil prices since mid-2014. Oil prices remain at low levels and, therefore, 2016 budget lost more than 67 per cent of oil revenues, despite high production, compared to oil revenues recorded in 2014.
Oman expects to fund 84 per cent or RO2.5bn of the projected deficit with external and domestic borrowing. The finance ministry says external US-dollar borrowing includes issuance of international bonds, Islamic bonds, and syndicated loans.
The rest of the deficit, estimated to be nearly RO500m, will be covered by drawing on reserves.
Aggregate revenues are expected to increase by 18 per cent to RO8.7bn. Oil and gas revenues account for 70 per cent of revenues with RO6.11bn. Non-oil revenues are estimated to be about RO2.59bn or 30 per cent of total revenues.
Total public spending is planned to decrease by about 2 per cent to RO11.7bn. Spending on projects is estimated at RO1.2bn. For the 2016 budget project spending was cut by 18 per cent to RO1.35bn. For 2017 the Ministry of Finance says: Spending on development projects has been considered not to be cut. The purpose is to ensure the completion of all on-going projects without delay, and make timely payments.
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