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A surge in expenditure turned an actual surplus in Oman’s budget in the first half of this year into a deficit in the first 10 months of 2010 despite a surge in its oil export earnings, official figures showed on Wednesday.
The figures by Oman’s Ministry of National Economy earlier showed the budget recorded a surplus of around RO708.2 million in the first half of last year but it turned into a deficit of RO91.2 million in the first 10 months.
The 10-month shortfall is way above the deficit of RO15.1 million recorded in the same period of 2009, the Ministry said in its December economic bulletin.
The figures showed the budget recorded a deficit because of a surge in spending, including what the report called “actual expenditure under settlement”, which it put at RO699.8 million in the first 10 months.
Total spending stood at RO5,835 million compared with around RO5,467 million in the first 10 months of 2009, the report showed.
It showed total revenue surged to nearly RO6,443 million in the first 10 months of 2010 from around RO5,452 million in the same period of 2009 because of a sharp rise in oil export earnings to nearly RO4,454 million from RO3,577 million.
The surge in oil exports was a result of nearly $15 increase in crude prices and a large rise in Oman’s oil output as the Gulf country is pushing ahead with an ambitious programme to reverse a fall in its oil production in previous years due to lower investment and a focus on gas field development.
Oman’s oil output soared to nearly 870,000 barrels per day in the first 10 months of last year from around 806,000 bpd in the same period of 2009. Last year’s output was the highest in nearly eight years.
A breakdown showed the increase in expenditure was mainly in current spending, which swelled to abut RO3,480 million in the first 10 months of 2010 from around RO3,206 million in the first 10 months of 2009.
Investment expenditure also grew to around RO2,354 million from RO2,261 million mainly because of lower funds for oil production.
Higher expenditure allied with a surge in oil production and prices to boost Oman’s nominal GDP by nearly 33.9 per cent to RO10,862 million in the first half of 2010 from around RO8,110 million in the first half of 2009.
The report showed the oil sector shot up by around 82.9 per cent while there was growth of 31.6 per cent in the gas sector, and 34.1 per cent in the manufacturing sector. Most other sectors recorded growth except hotels and restaurants.
Oman, which is not an OPEC member, has just endorsed a new five-year development plan that aims to achieve real GDP growth of three per cent annually and keep inflation under control.
Sultan Qaboos bin Saeed ratified the eighth plan at the start of 2011 to kick off one of the Gulf country’s largest development schemes targeting massive investments and intensification of plans to diversity its oil-reliant economy.
The Sultan also endorsed the 2011 budget, which forecast spending at a record high RO8.13 billion and revenue at RO7.28 billion, leaving a deficit of RO850 million, nearly four per cent of the estimated 2011 GDP.
“The plan aims to achieve minimum real GDP growth of three per cent a year and ensures inflation will remain at low levels….it will focus on stronger coordination between monetary and fiscal policies to achieve economic stability and on continuation of projects under way with an emphasis on new ventures,” Oman’s official media said early this month.
“The plan will also pursue diversification efforts and a drive to expand the country’s oil and gas production and increase hydrocarbon reserves.”
The newspapers, citing a government statement said the 2011 budget was nearly nine per cent higher than the 2010 budget, adding that this year’s budget is based on a record high oil price of $58 a barrel.
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