A sharp rise in oil prices allied with higher crude output to turn Oman’s fiscal deficit into a massive surplus in the first four months of 2012 despite a surge in public spending, according to official data.
The surplus stood at RO1,469 million (Dh14.1 billion) during January-April compared with a fiscal shortfall of RO114.3 million (Dh1.09 billion) in the first four months of 2011, showed the figures by the Omani Ministry of National Economy.
The surplus was mainly a result of a 33 per cent surge in oil export earnings to nearly RO3,286 million from RO2,420 million due to a sharp rise in crude prices and a slight increase in Oman’s oil production to nearly 888,800 barrels per day from 883,100 bpd in the same period, the figures showed.
The price of Oman’s crude soared to about $111.1 a barrel from $91.3 in the same period and this boosted the country’s total actual revenue by about 39 per cent to RO4,599 million from around RO3,295 million.
Gas revenue, including LNG sales from the liquefaction plant in the southern port of Sur, more than doubled to RO687.1 million from RO330.3 million.
Actual public expenditure swelled by nearly 25 per cent to about RO3,130 million in from nearly RO2,489 million, the report showed.
A breakdown showed current expenditure expanded by about 41.7 per cent while capital spending declined by around 11.8 per cent, mainly in civil ministries development spending and civil ministries capital expenditure. Allocations for oil production grew by nearly 5.4 per cent in the same period.
Oman, which is not an OPEC member, recorded a large fiscal surplus of RO864.8 million (Dh9.26 billion) in 2011 due to higher crude prices and output against an actual deficit of about RO48.8 million (Dh468 million) in 2010.
Oman had projected a shortfall of RO850 million when it announced its record 2011 budget early last year. But it massively revised up the gap to RO1,850 million after Sultan Qaboos approved new jobs and hefty pay rises for Omani government employees in response to demands during unrest in February 2011.
The Gulf country, which controls nearly five billions of proven oil reserves, 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.
Announcing its 2012 budget, the government projected record high spending of RO10 billion and revenue at RO8.8 billion, leaving a shortfall of RO1.2 billion.
Quoted by the official Omani news agency, oil minister Mohammed bin Hamad Al Rumhi said the 2012 was based on a record high oil price of $75 and crude output of 915,000 bpd, which he expected to be achieved this year.
He said the breakeven oil price for Oman’s budget this year would be around $90 on the basis of an expected increase in the country’s actual spending.
“If average oil prices surpassed that level through 2012, then Oman will be able to achieve a surplus in its budget,” he said.
Analysts believe crude prices this year could average as high as in 2011, when they surpassed $105 a barrel, despite the recent price fall to below $100.