Sharp rise in public revenue sees Oman fiscal deficit dip
Oman is expected to have sharply cut its budget deficit in 2009 after a surge in revenue and the Gulf nation appeared to have stayed within projected expenditure limits, official figures showed yesterday.
Oman, which is not an Opec member, had forecast 2009 spending at a record RO6.424 million (Dh61.6 billion) compared with a budgeted expenditure of RO5.8bn (Dh5.7 56bn) in 2008. Revenues were also estimated higher at RO5.614m (Dh53.9bn) in 2009 against RO5.4bn (Dh51.8bn) in 2008. The increase in spending nearly doubled the forecast gap to RO810m (Dh7.7bn) in 2009 from RO410m (Dh3.93bn) in 2008.
But official data showed the actual deficit in the first 11 months of 2009 stood at only around RO139.7m (Dh1.34bn).
The decline was a result of a sharp increase in public revenue to nearly RO6.01bn (Dh57.7bn) compared with budget forecasts while actual spending remained far below the 2009 target, standing at about RO6.16bn (Dh59bn), the Omani Ministry of National Economy said in its December bulletin.
Experts said they expected the actual shortfall for the whole year to be lower on the grounds oil prices climbed to one of their highest levels in 15 months in December, averaging more than $70 a barrel.
"Oman assumed an oil price of around $45 a barrel in its 2009 budget but the price of Omani crude averaged above $55 through the year," a Riyadh-based economist said. "This means Oman could have recorded a massive surplus but as you know, around 10 per cent of the oil revenue is transferred to the reserve fund every year… this might explain why the balance is upset."
The figures showed Oman's oil revenues plunged by around 26.7 per cent to RO3.98bn (Dh38.2bn) in the first 11 months of 2009 from RO5.44bn (Dh52.2bn) in the same period of 2008 as a result of the decline in crude prices, which averaged a record $94 through 2008.
The country's gas revenues also dived by around 19.4 per cent to RO643.3m (Dh6.2bn) from RO797.8m (Dh7.65bn) while there was a surge of 55.9 per cent in corporate income tax revenue and a plunge of 66.7 per cent in capital revenues. Other earnings dipped by 15 per cent.
A revenue breakdown showed investment soared by 19.9 per cent to RO2.16bn (Dh20.7bn) in the first 11 months of 2009 from RO1.80bn (Dh17.2bn) in the first 11 months of 2008 following a government pledge to expand capital spending to cushion the impact of the global financial turmoil.
The figures showed Oman, which controls around five billion barrels in proven oil resources, was close to its crude output target in 2009 as production increased to nearly 810,000 bpd from about 755,000 bpd in 2008.
Despite the surge, the Oman's oil sector plunged by 44.4 per cent in the first nine months of 2009 due to sharp fall in prices. This depressed the nominal GDP by 27.4 per cent during the period.
But real GDP grew by around 3.7 per cent through 2009 mainly due to higher crude output and expansion in non-oil sectors, Minister of National Economy Ahmed Mecki said after announcing the 2010 budget last week.
The 2010 budget is based on a more optimistic oil price of $50 a barrel compared with $45 in 2009. Spending was projected at a record RO7,180m (Dh68.9bn), nearly nine per cent above the 2009 budget, while revenues were assumed at RO6,380m (Dh61.2bn), leaving a deficit of RO800m (Dh7.68bn), slightly lower than the 2009 shortfall of RO810m.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.