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
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).
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.
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.