Oman set to spend more in 2009 despite oil decline |
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Oman is expected to approve an increase of more than 19 per cent in its budgetary expenditure for 2009 despite a sharp decline in oil prices over the past few weeks, according to official figures.
The draft 2009 budget published in Omani and other newspapers showed spending is forecast at RO6.93 billion (Dh66.5bn) compared with RO5.8bn in 2008, an increase of around 19.3 per cent.
Revenues are projected at RO6.54bn, an increase of nearly 21 per cent of the 2008 revenues, the figures showed.
The budget, which is to be ratified by the government and the Shura council (parliament) before it is presented to Sultan Qaboos for final endorsement, estimates a deficit of RO385 million.
According to a report from Muscat by the London-based Arabic language daily Al Hayat, the 2009 budget is based on a price of Omani crude of $45 a barrel compared with $55 in the previous year's budget.
Citing official estimates, the report said the budget expects an increase of 21 per cent in oil and gas earnings and 22 per cent in non-oil revenue.
Omani Minister of National Economy Ahmed Mecki said the budget deficit would be shored up through withdrawal from the state reserve fund. But he added this will not be needed if oil prices averaged $60 through 2009.
"The government is keen to carry out all approved projects to stimulate growth, achieve a sort of balance between revenue and expenditure, and give more attention to development of human resources," he said.
"We will also give priority to investment in the oil and gas sector and at the same time consolidate our financial resources through budget surpluses, which could be realised if oil prices averaged above the forecast level."
Experts said Oman's forecast about higher oil and gas revenues are based on the fact that it expects high income from LNG exports and an increase of at least two per cent in its crude output to an average 805,000 bpd.
Oman has the second largest LNG plant in the Middle East, with its production capacity peaking at nearly 10 million tonnes a year following the completion of a $750m (Dh2.75bn) expansion project to lift output by 50 per cent.
The country, which is not an Opec member, has also been locked in a multi-billion programme to reverse a decline in its crude output that tumbled to one of its lowest levels of around 714,000 bpd in 2007. A surge in crude prices this year allowed Oman to record its highest budget surplus in the first eight months, standing at RO1.567bn. The surplus surged despite a sharp increase in actual expenditure.
Figures by the Ministry of National EconomyMinistry of National Economy
showed Oman's actual oil and non-oil revenues soared to an all-time high of nearly RO6.2bn in the first three quarters of this year, surpassing the country's total 2007 income of around RO5.9bn.The level is also above the projected revenues in the 2008 budget of around RO5.4bn, which will sharply widen the country's fiscal surplus this year.
The figures showed the surge in the total revenues was a result of high growth in crude export earnings by around 48 per cent to RO4.33bn from nearly RO2.92bn in the same period of last year. Non-oil revenues jumped by around 23.8 per cent to RO1.26bn from nearly RO1.02bn in the same period.
Oil prices averaged more than $100 a barrel in the first nine months of this year compared with nearly 60 last year, while Oman's crude output continued to rise in 2008 as it is pushing ahead with the capacity expansion plans.
Experts expect the actual surplus in 2008 to hit an all- time high as Oman is projected to net its highest ever oil income of more than $20bn.
Like other Gulf oil producers, strong oil prices have turned Oman's fiscal deficits into surpluses over the past five years and sharply boosted growth its economy, which galloped by nearly 13 per cent from about RO13.73bn in 2006 to RO15.5bn in 2007.
By Nadim Kawach
© Emirates Business 24/7 2008
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