03 April 2012
MUSCAT -- The Sultanate has registered one of its biggest budget surplus of RO 964.8 million in 2011 as high oil prices pushed revenues far above projections. According to data available from the Ministry of Finance, the actual public expenditure swelled by nearly 8.8 per cent to RO 8.66 billion in 2011 from around RO 7.96 billion in 2010. This achievement was the result of a 59 per cent rise in oil export earnings to RO 8.697 billion due to a sharp rise in crude prices and the country's oil production to nearly 884,000 barrels per day (bpd) from 865,000 bpd in the same period the year before.
High oil income boosted the country's total actual revenue by about 44.6 per cent to RO 11.43 billion from RO 7.91 billion. "The expansionary financial, economic and monetary policies pursued by the Sultanate provided a sustained catalyst for development as the economy recorded a 7 per cent growth in 2011. The economy was largely unaffected by the recent turmoil in global financial markets," says Joice Mathew, senior manager, Research, at United Securities.
Oman's budget for 2011 was based on an average oil price of $58 per barrel with a production of 896,000 barrels per day. Oman expects to boost spending in its 2011-2015 development plan by a whopping 113 per cent as it expects high oil prices and is pursuing plans to boost crude output. Gas revenues increased by 26.1 per cent on security expenses increased by 13 per cent to RO 2.134 billion and civil ministries expenses increased by 3.4 per cent to RO 2.702 billion.
Investment expenditure increased by 6.9 per cent to RO 2.777 billion. In this, the development expenditure for civil ministries has increased by 9.3 per cent to RO 1.8 billion. Total subsidies and other participations has increased 23.6 per cent to RO 713 million, while total expenses under settlement stood at RO 1.809 billion during 2011.
At the same time, the total expenditure for the financial year 2012 is estimated at about RO 10 billion, an increase of 23 per cent against the origin 2011 budget figures and increase of 8.7 per cent against the budgeted (amended) level RO 9.2 billion in 2011.
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 cost 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.
The government continues to focus on human development as education sector maintains its 2011 level at 11.5 per cent out of total spending.
However, if we take into consideration the spending on students' education, internal and external missions, the total spending on general education will amount to RO 1.3 billion, ie 13 per cent of the total public expenditure.
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 joblessness 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 average daily production of oil during the first nine months of 2011 rose to about 883,200 barrels.
The average oil price during the period rose to $102.06 per barrel, compared to 860,200 barrels and $76.58 respectively during the corresponding period in 2010.
Most of the increase is due to the remarkable growth of the industrial activities by 18 per cent, service activities by 11.5 per cent and agriculture and fisheries activities by 4 per cent during the period.
At the same time, Dr Mohammed bin Hamad al Rumhy, Oil and Gas Minister, said that 25 per cent of the current oil prices are attributed to technical reasons and not to supply and demand forces.
Therefore, if the conditions remain same, the average oil price for the current year may easily range between $120 and $125.
As for the ideal price which can bring surplus to the State Budget, Dr Rumhy said that oil revenues in 2012 State Budget are calculated at $75 therefore having $90 per barrel will cover the deficit.
According to experts, the average price of $75 per barrel used in 2012 budget, higher by 29.3 per cent than the one used in 2011 budget at $58 a barrel, which is the highest in the country's history, is considered a calculated strategy bearing in mind the multiple factors which are influencing the oil prices and are not limited to demand supply formula but to the other external factors.
The abundance of Oman's gas resources and the country's strategic position at the foot of the 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.
MUSCAT -- The Sultanate has registered one of its biggest budget surplus of RO 964.8 million in 2011 as high oil prices pushed revenues far above projections. According to data available from the Ministry of Finance, the actual public expenditure swelled by nearly 8.8 per cent to RO 8.66 billion in 2011 from around RO 7.96 billion in 2010. This achievement was the result of a 59 per cent rise in oil export earnings to RO 8.697 billion due to a sharp rise in crude prices and the country's oil production to nearly 884,000 barrels per day (bpd) from 865,000 bpd in the same period the year before.
High oil income boosted the country's total actual revenue by about 44.6 per cent to RO 11.43 billion from RO 7.91 billion. "The expansionary financial, economic and monetary policies pursued by the Sultanate provided a sustained catalyst for development as the economy recorded a 7 per cent growth in 2011. The economy was largely unaffected by the recent turmoil in global financial markets," says Joice Mathew, senior manager, Research, at United Securities.
Oman's budget for 2011 was based on an average oil price of $58 per barrel with a production of 896,000 barrels per day. Oman expects to boost spending in its 2011-2015 development plan by a whopping 113 per cent as it expects high oil prices and is pursuing plans to boost crude output. Gas revenues increased by 26.1 per cent on security expenses increased by 13 per cent to RO 2.134 billion and civil ministries expenses increased by 3.4 per cent to RO 2.702 billion.
Investment expenditure increased by 6.9 per cent to RO 2.777 billion. In this, the development expenditure for civil ministries has increased by 9.3 per cent to RO 1.8 billion. Total subsidies and other participations has increased 23.6 per cent to RO 713 million, while total expenses under settlement stood at RO 1.809 billion during 2011.
At the same time, the total expenditure for the financial year 2012 is estimated at about RO 10 billion, an increase of 23 per cent against the origin 2011 budget figures and increase of 8.7 per cent against the budgeted (amended) level RO 9.2 billion in 2011.
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 cost 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.
The government continues to focus on human development as education sector maintains its 2011 level at 11.5 per cent out of total spending.
However, if we take into consideration the spending on students' education, internal and external missions, the total spending on general education will amount to RO 1.3 billion, ie 13 per cent of the total public expenditure.
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 joblessness 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 average daily production of oil during the first nine months of 2011 rose to about 883,200 barrels.
The average oil price during the period rose to $102.06 per barrel, compared to 860,200 barrels and $76.58 respectively during the corresponding period in 2010.
Most of the increase is due to the remarkable growth of the industrial activities by 18 per cent, service activities by 11.5 per cent and agriculture and fisheries activities by 4 per cent during the period.
At the same time, Dr Mohammed bin Hamad al Rumhy, Oil and Gas Minister, said that 25 per cent of the current oil prices are attributed to technical reasons and not to supply and demand forces.
Therefore, if the conditions remain same, the average oil price for the current year may easily range between $120 and $125.
As for the ideal price which can bring surplus to the State Budget, Dr Rumhy said that oil revenues in 2012 State Budget are calculated at $75 therefore having $90 per barrel will cover the deficit.
According to experts, the average price of $75 per barrel used in 2012 budget, higher by 29.3 per cent than the one used in 2011 budget at $58 a barrel, which is the highest in the country's history, is considered a calculated strategy bearing in mind the multiple factors which are influencing the oil prices and are not limited to demand supply formula but to the other external factors.
The abundance of Oman's gas resources and the country's strategic position at the foot of the 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
