07 April 2012
Oman's economic performance in 2011 and into 2012 shows enormous growth. The massive fiscal surplus in the 2011 budget is a clear indication that the government has enough funds in hand to make financing available for the ongoing developmental projects.
A surge in crude prices allied with a steady rise in oil output made the Sultanate possible to record one of its largest fiscal surpluses of RO 964.8 million in 2011 despite a large increase in actual expenditure, according to official data.
This achievement was made despite the fact that the enhanced 2011 budget was presented at a time when unexpected financial burden was placed on the government following the unrest witnessed in parts of the country. An additional funding of RO 1 billion was earmarked towards employment generation, unemployment pay-outs, cost of living allowances, enhanced pension and social security pay-outs, among other welfare benefits.
This additional burden was expected to have translated into an increase in the projected budget deficit of RO 850 million for 2011. As a result of the new financial commitments by the government, public expenditure burgeoned by nearly 8.8 per cent to RO 8.66 billion.
But the Minister Responsible for Financial Affairs Darwish bin Ismaeel bin Ali al Balushi was still optimistic.
"The budget deficit is expected to be offset by higher oil revenues ranging from $75-80 this year.
Consequently, the government will neither have to dip into its financial reserves, not resort to any borrowing", the ministers had said at the time of the unveiling of the budget.
At the same time he set the budge on an average oil price of $58 per barrel with a production of 896,000 barrels per day.
But prices averaged at $102 and earnings registered a 59 per cent rise to RO 8.697 billion and oil production reached nearly 884,000 barrels per day. The total actual revenue posted 44.6 per cent to RO11.43 billion.
The surplus budget policy is important to encourage economic growth of a country. The less the government borrows from the public, the lesser the pressure on interest and inflation rates and the more funds are made available in the financial market.
Such funds may be used by businessmen to build factories, hire workers, buy equipment and open more employment opportunities. By keeping more funds in the hands of the private sector rather than competing for credit, the government helps make financing available for its citizens.
The average price of $ 75 per barrel used in 2012 budget, higher by 29.3 per cent than the one used in 2011 budget is the highest in the country's history. It can be seen as a calculated strategy bearing in mind the multiple factors which are influencing the oil prices as they are not limited to demand supply formula but to the other external factors.
In Oman, the government continues to focus on human development. Education sector maintains its 2011 level at 11.5 per cent out of the total spending.
However, if we take into consideration the spending on students' education, internal and external missions, the total spending on general education amounts to RO 1.3 billion, ie 13 per cent of the total public expenditure.
Current expenditure represents the highest portion of the government expenditure at 64.5 per cent (mainly because of continuing providing jobs to nationals in the ministries and governmental entities in addition to the increase cont of providing more than 50,000 jobs provided in 2011 within governmental entities), followed by investment expenditure at RO 2.7 billion then participation and subsidy to private sector at RO 845 million.
While most economies witnessed a slowdown in the face of US debt and euro zone crisis in the recent past, in Oman the continuing excellent performance of the economy holds out a promising outlook for this year.
The ability to control inflation levels within the targets mitigated its negative impacts on real growth rates. Inflation rate in the Sultanate stood at 3.3 per cent in December 2011.
The latest GDP data shows there is improved increase in the value of national output and expenditure enabling citizens to enjoy more goods and services. Also it is an indication about lower unemployment with higher output firms tending to employ more workers.
The gross domestic product of the country made a substantial 23.3 per cent growth at the end of September 2011 to hit RO 20,072.3 million compared to RO 16,276.2 million in the corresponding period in 2010.
The abundance of Oman's gas resources and the country's strategic position at the foot of Arabian Sea have made the export of this commodity one of the lynchpins of the government's Vision 2020 economic diversification plan.
So much so that the government has made hefty investments in its sea ports infrastructure in order to enable to carry its gas in liquefied form to its customers.
Oman's economic performance in 2011 and into 2012 shows enormous growth. The massive fiscal surplus in the 2011 budget is a clear indication that the government has enough funds in hand to make financing available for the ongoing developmental projects.
A surge in crude prices allied with a steady rise in oil output made the Sultanate possible to record one of its largest fiscal surpluses of RO 964.8 million in 2011 despite a large increase in actual expenditure, according to official data.
This achievement was made despite the fact that the enhanced 2011 budget was presented at a time when unexpected financial burden was placed on the government following the unrest witnessed in parts of the country. An additional funding of RO 1 billion was earmarked towards employment generation, unemployment pay-outs, cost of living allowances, enhanced pension and social security pay-outs, among other welfare benefits.
This additional burden was expected to have translated into an increase in the projected budget deficit of RO 850 million for 2011. As a result of the new financial commitments by the government, public expenditure burgeoned by nearly 8.8 per cent to RO 8.66 billion.
But the Minister Responsible for Financial Affairs Darwish bin Ismaeel bin Ali al Balushi was still optimistic.
"The budget deficit is expected to be offset by higher oil revenues ranging from $75-80 this year.
Consequently, the government will neither have to dip into its financial reserves, not resort to any borrowing", the ministers had said at the time of the unveiling of the budget.
At the same time he set the budge on an average oil price of $58 per barrel with a production of 896,000 barrels per day.
But prices averaged at $102 and earnings registered a 59 per cent rise to RO 8.697 billion and oil production reached nearly 884,000 barrels per day. The total actual revenue posted 44.6 per cent to RO11.43 billion.
The surplus budget policy is important to encourage economic growth of a country. The less the government borrows from the public, the lesser the pressure on interest and inflation rates and the more funds are made available in the financial market.
Such funds may be used by businessmen to build factories, hire workers, buy equipment and open more employment opportunities. By keeping more funds in the hands of the private sector rather than competing for credit, the government helps make financing available for its citizens.
The average price of $ 75 per barrel used in 2012 budget, higher by 29.3 per cent than the one used in 2011 budget is the highest in the country's history. It can be seen as a calculated strategy bearing in mind the multiple factors which are influencing the oil prices as they are not limited to demand supply formula but to the other external factors.
In Oman, the government continues to focus on human development. Education sector maintains its 2011 level at 11.5 per cent out of the total spending.
However, if we take into consideration the spending on students' education, internal and external missions, the total spending on general education amounts to RO 1.3 billion, ie 13 per cent of the total public expenditure.
Current expenditure represents the highest portion of the government expenditure at 64.5 per cent (mainly because of continuing providing jobs to nationals in the ministries and governmental entities in addition to the increase cont of providing more than 50,000 jobs provided in 2011 within governmental entities), followed by investment expenditure at RO 2.7 billion then participation and subsidy to private sector at RO 845 million.
While most economies witnessed a slowdown in the face of US debt and euro zone crisis in the recent past, in Oman the continuing excellent performance of the economy holds out a promising outlook for this year.
The ability to control inflation levels within the targets mitigated its negative impacts on real growth rates. Inflation rate in the Sultanate stood at 3.3 per cent in December 2011.
The latest GDP data shows there is improved increase in the value of national output and expenditure enabling citizens to enjoy more goods and services. Also it is an indication about lower unemployment with higher output firms tending to employ more workers.
The gross domestic product of the country made a substantial 23.3 per cent growth at the end of September 2011 to hit RO 20,072.3 million compared to RO 16,276.2 million in the corresponding period in 2010.
The abundance of Oman's gas resources and the country's strategic position at the foot of Arabian Sea have made the export of this commodity one of the lynchpins of the government's Vision 2020 economic diversification plan.
So much so that the government has made hefty investments in its sea ports infrastructure in order to enable to carry its gas in liquefied form to its customers.
© Oman Daily Observer 2012
