Oman raises bud­get spend­ing to RO13.2bn Ex­pen­di­tures

RO 10.7bn rev­enues are 6% higher than 2019 es­ti­mates RO 2.5bn deficit is RO300mn lower than the 2019 es­ti­mates RO 755mn sub­si­dies higher than what were bud­geted for 2019

Muscat Daily - - FRONT PAGE -

The Omani gov­ern­ment on Wed­nes­day an­nounced the bud­get for 2020 in­creas­ing to­tal spend­ing to RO13.2bn, which is RO300mn or 2 per cent higher com­pared to the to­tal spend­ing es­ti­mated in the 2019 bud­get.

The state­ment is­sued by the Min­istry of Fi­nance noted that the bud­get is a bridge to Oman Vi­sion 2040 and 10th five-year de­vel­op­ment plan (2021-25).

Rev­enues

Oman’s 2020 bud­get, which is based on an oil price as­sump­tion of US$58 per bar­rel, es­ti­mates to­tal rev­enues of RO10.7bn, an in­crease of 6 per cent com­pared to the es­ti­mated rev­enues for 2019.

To­tal rev­enues con­sist of oil and gas rev­enue of RO7.7bn, rep­re­sent­ing 72 per cent of the to­tal. The non-hy­dro­car­bon rev­enue is pro­jected at RO3bn, up 13 per cent com­pared to the 2019 bud­get.

‘This in­crease is due to higher tax rev­enue by 9 per cent and non-tax rev­enue by 18 per cent as com­pared to what had been achieved in 2019. This comes in line with the gov­ern­ment’s ef­forts to di­ver­sify the sources of in­come and en­hance non-hy­dro­car­bon rev­enue. The re­cent es­tab­lish­ment of Tax Author­ity will help to im­prove the ef­fi­ciency of tax col­lec­tion,’ the bud­get state­ment said.

To­tal cur­rent ex­pen­di­tures of the min­istries and gov­ern­ment units are es­ti­mated at RO4.6bn for 2020.

The salaries, an­nual al­lowance and en­ti­tle­ments ac­count for 76 per cent of the to­tal cur­rent ex­pen­di­tures of min­istries and gov­ern­ment units, with an amount of RO3.5bn.

Spend­ing on de­vel­op­ment projects is es­ti­mated at RO1.3bn in the 2020 bud­get, rep­re­sent­ing the es­ti­mated amount to be paid dur­ing the year as per the ac­tual work in progress for the projects.

‘Spend­ing on de­vel­op­ment projects will not be cut to en­sure the com­ple­tion of all on­go­ing projects with­out de­lay, and also to en­sure that the rel­e­vant pay­ments are made on time,’ the bud­get state­ment said.

Oil and gas pro­duc­tion ex­pen­di­tures are es­ti­mated at RO2.2bn in the 2020 bud­get, the same as for the 2019 bud­get es­ti­mates. This in­cludes the op­er­a­tional and cap­i­tal costs of oil and gas pro­duc­tion, and ex­penses re­quired to main­tain fu­ture oil and gas pro­duc­tion, as well as en­hance oil and gas re­serves.

The ap­pro­pri­a­tions al­lo­cated for sub­si­dies are es­ti­mated at RO755mn, slightly higher than the bud­getary fig­ures of 2019.

This in­cludes sub­si­dies for oil prod­ucts, hous­ing and de­vel­op­ment loans, and op­er­a­tional sup­port to the state-owned en­ter­prises (SOEs), the bud­get state­ment said.

Deficit

This year’s bud­get strives to achieve fis­cal bal­ance over the medium-term by main­tain­ing fis­cal dis­ci­pline. Oman’s 2020 bud­get es­ti­mates a deficit of RO2.5bn (around 8 per cent of the GDP), which is RO300mn lower than the RO2.8bn bud­get deficit es­ti­mated in the 2019 bud­get.

As much as 80 per cent or RO2bn of the to­tal deficit will be fi­nanced through ex­ter­nal and do­mes­tic bor­row­ings, while the re­main­ing RO500mn deficit will be cov­ered by draw­ing on re­serves, ac­cord­ing to the bud­get state­ment. ‘The deficit is trend­ing down­ward from its level over the past three years. Any re­sul­tant in­crease in oil rev­enue will be utilised in fi­nanc­ing the deficit.

‘As the ef­forts are on­go­ing to con­trol the an­nual deficit through sus­tained fis­cal con­sol­i­da­tion, the 2019 bud­get deficit is pro­jected to reach nearly RO2.6bn, around 7 per cent lower than the es­ti­mated deficit for the 2019 bud­get,’ the bud­get state­ment said.

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