23 July 2017
A E James
Muscat: A recovery in crude oil prices and prudent economic policies of the Oman government have resulted in a marked drop in the country’s budget deficit for the first five months of this year.

The Sultanate’s budget deficit for the January to May period of this year declined by 19.9 per cent to OMR2.04 billion from OMR2.54 billion for the same period of 2016. 

If the trend continues, market analysts believe the government will be in a comfortable position to control its deficit for the whole year at OMR4 billion.

Since the beginning of this year, the Oman government has adopted a series of measures to bring down deficit, which included both austerity measures and steps to enhance non-oil revenues.

These measures included the removal of subsidy on petroleum products, an increase in the price of natural gas supplied to industries, increase in the corporate income tax, rise in fees of several government services and a control on new appointments in public sector.

All these measures, along with a smart recovery in crude oil prices following a decision to cut crude oil production of Opec (Organisation of Petroleum Exporting Countries) and non-Opec members have aided the authorities in controlling the deficit substantially.

Total government revenue surged by 19.2 per cent to OMR3.32 billion during the January to May period of 2017, from OMR2.79 billion for the same period of last year, thanks to a substantial growth in net oil revenue. Net oil revenue during the five month-period of this year shot up 37.3 per cent to OMR1.77 billion from OMR1.29 billion, while revenue from natural gas grew by 6.5 per cent to OMR581.5 million, from OMR546.2 million.

The average price of Oman Crude during the January to May period of this year grew by 51 per cent to $51.6 per barrel, from $34.2 a barrel for the same period of last year. This is against government’s assumed price of $45 per barrel for estimating budget revenue for this year. Oman produced 146.29 million barrels of crude oil and condensates during the January to May period of 2017, against 151.68 million barrels for the same period of last year, registering a fall of 3.6 per cent. The average daily production also fell by 2.9 per cent to 968,800 barrels for the January to May period of this year, against 997,900 barrels for the same period of 2016.

Also, total budget expenditure of the government during the five-month period rose by 2.9 per cent to OMR4.56 billion from OMR4.43 billion. Current expenditure grew by 8.2 per cent to OMR3.18 billion, while investment expenditure fell by 16.2 per cent to OMR1.06 billion during the January to May period.

The Oman government in January said its budget expenditure and revenue are estimated at OMR11.7 billion and OMR8.7 billion, leaving an estimated deficit of OMR3 billion.

© Times of Oman 2017