Fiscal reforms bolster revenues in 2016: CBO
FINANCIAL UPTICK: Current revenues increased by 13.3 per cent to RO 2,113.6 million in 2016 from RO 1,865.1 million in 2015
Total government revenue declined by 16.1 per cent to RO 7,608.2 million in 2016 due to the substantial fall in oil revenues, as revenue under all other constituents increased during the year, the Central Bank of Oman (CBO) revealed in its newly published 2016 Annual Report.
The lower level of oil prices prevailing during 2016, notwithstanding some recovery witnessed subsequent to the large dip in January, dented the government’s revenue from the hydrocarbon sector during the year, it noted.
Average Omani crude oil prices fell to $40.1 per barrel in 2016 from $56.5 in 2015, leading to a 35.4 per cent decline in government oil revenue to RO 3,651.2 million in 2016. In contrast, government revenues from natural gas increased by 3.5 per cent to RO 1,536.6 million in 2016 compared to a decline of 12 per cent in 2015.
“The impact of sharp cut in the government spending, which accounts for a major share in the aggregate demand of the economy, on the back of significant decline in oil revenues, spilled over to the growth in nonhydrocarbon sector, eventually leading to overall contraction in the Omani economy,” the apex bank said.
Despite the overall economic slowdown, the other current revenues increased by 13.3 per cent to RO 2,113.6 million in 2016 from RO 1,865.1 million in 2015, mainly reflecting various fiscal reforms, including increase in fees and user charges for public services, implemented by the government and receipts on account of net grants, the report said.
The remaining sub-components of public revenues consist of capital revenues and capital repayments, which were relatively much smaller, and generated revenues amounting to RO 15.8 million and RO 291 million, respectively, during 2016. Capital repayments witnessed phenomenal growth of 508.8 per cent during the year mainly due to selling investments in non-financial companies.
In terms of contribution revenues, the share of oil to total revenues declined to 48.0 per cent in 2016 from 62.4 per cent during 2015, while the share of gas revenues, other current revenues, and capital payments increased to 20.2 per cent, 27.8 per cent, and 3.8 per cent, respectively, from 16.4 per cent, 20.6 per cent, and 0.5 per cent, respectively, during this period.
Current revenues generated from taxes and fees amounted to RO 1,141.0 million in 2016 with an increase of 3.8 per cent, despite significant slowdown, due to various fiscal measures undertaken by the government.
Such measures mainly included increase in fees on licenses and others, and removal of exemption of custom duties on imports of some commodities, and increase in custom duties on import of certain items (such as tobacco, alcohol etc). With the exception of income tax on companies and establishments (which declined by 14.0 per cent in 2016), all other major sub-components of other current receipts registered an increase in 2016. Fees on licence and others increased by 9.1 per cent, while revenues generated from custom duties increased significantly by 28.7 per cent during 2016. The share of taxes and fees revenues in other current revenues, however, decreased to 54.0 per cent in 2016 from 58.9 per cent during 2015, the Central Bank report said.
Major items under non-tax revenues are water revenues, airport revenue, public communication services toll, income from government investments, passport & immigration fees, miscellaneous administrative fee & charges, compensation, fines & forfeitures and miscellaneous revenues.
Notwithstanding a pronounced fall in revenue from one of the major contributors, ie income from government investment, non-tax revenues increased by 2.3 per cent to RO 783.8 million in 2016 compared with a decline of about 15.0 per cent in 2015, mainly on account of higher collections under water revenues, passport & immigration fees, compensation, fines & forfeitures and public communication services toll, according to the CBO.
The government has increased the water user charges and consequently, the water revenues witnessed a substantial growth of 40.5 per cent in 2016 as against a modest decline of 2.2 per cent during 2015.
The revenues from public communication services toll shot up substantially to RO 106.8 million in 2016, after witnessing a marked decline to RO 4.2 million in 2015. The receipts under passport & immigrations fees increased markedly by 80.0 per cent to RO 58.5 million in 2016, mainly reflecting upward revision in visa fees.