Sem­i­nar dis­cusses Oman bud­get 2020 and measures to drive growth

Muscat Daily - - BUSINESS -

Mus­cat - Con­tin­ued gov­ern­ment spend­ing in spec­i­fied ar­eas along with the ac­tive role of the pri­vate sec­tor is ex­pected to help achieve fis­cal sta­bil­ity and drive eco­nomic growth in the sul­tanate, KPMG Lower Gulf rep­re­sen­ta­tives said at a sem­i­nar held in Mus­cat.

Fol­low­ing pub­li­ca­tion of Oman’s Bud­get for 2020, KPMG Lower Gulf pro­vided anal­y­sis and dis­cussed its im­pli­ca­tions for cor­po­rates with a num­ber of Oman’s busi­ness lead­ers, a press re­lease said.

Ashok Har­i­ha­ran, part­ner and head of tax at KPMG Lower Gulf Oman, pre­sented some of the key high­lights of the bud­get and ad­dressed what it means for busi­nesses. He was joined by pan­el­lists and of­fi­cials from Min­istry of Fi­nance (MoF) who pro­vided in­sights on Oman’s eco­nomic per­for­mance in 2019, ex­pec­ta­tions for 2020, as well as the busi­ness op­por­tu­ni­ties avail­able for lo­cal and for­eign in­vestors.

Oman re­vealed its 2020 bud­get on Jan­uary 1. To­tal spend­ing is bud­geted at RO13.2bn, an in­crease of 2 per cent against the pre­vi­ous year’s bud­get. Rev­enues are es­ti­mated to grow by 6 per cent to RO10.7bn, leav­ing a bud­get deficit of RO2.5bn. The deficit is 8 per cent of the GDP for 2020, which is tar­geted to grow by 3 per cent.

This year’s bud­get is based on an oil price of US$$58/bbl, which is the same as bud­geted for 2019. The av­er­age re­alised price of oil for 2019 was US$$64/bbl.

The 2020 bud­get demon­strates the gov­ern­ment’s fo­cus on con­trol­ling deficit, which is ex­pected to de­cline by 11 per cent from RO2.8bn in 2019 to RO2.5bn in 2020. Debt as a pro­por­tion of GDP is likely to rise but re­main be­low 60 per cent. Oil and gas rev­enues con­sti­tute a sig­nif­i­cant por­tion of gov­ern­ment rev­enues (72 per cent), al­though the pro­por­tion is slowly de­clin­ing. Ex­pen­di­ture is kept un­der con­trol with a bud­geted in­crease of only 2 per cent, at­trib­ut­able to an in­crease in in­ter­est cost on bor­row­ings.

Har­i­ha­ran said, “The im­por­tance of achiev­ing a fis­cal bal­ance as en­vi­sioned by the 2020 bud­get is un­der­lined by the gov­ern­ment’s ‘Tawazun’ ini­tia­tive, which seeks to en­hance rev­enues, op­ti­mise costs and re­duce debt. The pri­vate sec­tor is ex­pected to play a greater role in de­vel­op­ment projects, job cre­ation and achiev­ing eco­nomic di­ver­si­fi­ca­tion. In­vestor friendly reg­u­la­tory changes made in 2019 are ex­pected to assist in achiev­ing tar­geted rates of for­eign and do­mes­tic in­vest­ment. De­vel­op­ment spend­ing of RO5.3bn is also ex­pected to gen­er­ate em­ploy­ment op­por­tu­ni­ties. We be­lieve the bud­get steers the econ­omy in the right di­rec­tion in these chal­leng­ing global eco­nomic sit­u­a­tions.”

The gov­ern­ment is also fo­cus­ing on de­vel­op­ing a multi-year bud­get frame­work (2020-2024) af­ter con­sid­er­ing Vi­sion 2040 and the Tenth Five-Year Plan. This is one of the five-point ac­tion plans iden­ti­fied to achieve fis­cal bal­ance over the medium term. Five strate­gic sec­tors (man­u­fac­tur­ing, trans­port and lo­gis­tics, tourism, fish­eries and min­ing) have been iden­ti­fied as key to di­ver­si­fi­ca­tion, mov­ing the econ­omy away from oil and gas and the con­tri­bu­tion of these sec­tors to the GDP stood at 20.6 per cent in 2019.

The sem­i­nar also in­cluded a dis­cus­sion with es­teemed pan­el­lists H H Dr Ad­ham al Said, as­sis­tant pro­fes­sor of eco­nomics, Sul­tan Qa­boos Univer­sity; San­jay Kawa­tra, COO, Omin­vest and L’oai Bataineh, CEO, U-Cap­i­tal. MoF of­fi­cials also pro­vided valu­able in­sights on as­pects such as eco­nomic ben­e­fits reaped from gov­ern­ment in­vest­ments over re­cent years, ef­fi­cient debt con­trol pol­icy and po­ten­tial op­por­tu­ni­ties for the pri­vate sec­tor in up­com­ing mega projects.

Over­all, all speak­ers at the sem­i­nar noted that the 2020 bud­get pro­vides the right outlook to achieve fis­cal bal­ance, con­tinue in­vest­ment spend­ing and main­tain so­cial wel­fare.

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