Oman has created its 2018 Budget, an increase from 2017 proposed figure of 11.7Billion Omani Rials (30.5BillionUS$appx) to 12.5Billion Omani Rials (32.5BillionUS$appx)an increase of 6.8%. Oman’s GDP is hoped to increase by 3% in 2018.
Income is anticipated to rise from 8.7Billion Omani Rials (22,6BillionUS$appx) to 9.5Billion Omani Rials (24.7BillionUS$appx) an increase of 9.7%. GDP and Government revenues are dependent to an extent on the oil price. This is currently around US$65 for Brent and the Oman Government figures are based on oil at US$50 and production (presumably) of around 1million barrels a day (as now).
Expenditure figures are based on Income of 9.5Billion and expenditure of 12.5Billion Omani Rials. Education/Health/Housing/Welfare of 3.88Billion Omani Rials(10.1BillionUS$appx); a possible additional 80Million Omani Rials for Social Housing and 30Million Omani Rials for Social Loans (the phrasing used in the newspapers do not make the allocation detail clear). Government Sector Wages are anticipated to be 3.3Billion (8.6BillionUS$appx) . This leaves over5.3Billion (13.8BillionUS$appx)that will presumably (its not stated at the moment) be spread between security (the Police and Armed Forces) which in 2017 was budgeted at 3.3Billion Omani Rials (8.58BillionUS$appx)and Capital Expenditure of various types that therefore might be around2Billion Omani Rials (5.2BillionUS$appx).
Oman’s actual deficit for the first 10 months of 2017 dropped to 3.20 Billion Omani Rials (8.32BillionUS$appx) from 4.81 Billion Omani Rials (12.6BillionUS$appx) a year earlier. This was largely due to increased oil income. The 2018 Budget deficit will be met by loans of 2.5Billion Omani Rials (6.5BillionUS$appx) and drawing down from State Reserves of 500Million Omani Rials (1.3BillionUS$appx)
The expected introduction of VAT has been postponed until 2019 (from 2018) and further delay can be expected as both the government and companies seem behind schedule. The tax was expected to add between 200-500Million Omani Rials (520Million-1.3BillionUS$appx)to government income. This delay however may serve to stimulate direct imports rather than though Dubai (as is often done now and therefore adds to end costs) and give overall should give Oman a cost advantage over the UAE.
The continuing actual deficits in Oman’s budget that have been over 3Billion Rials (7.8BillionUS$appx)per year for several years has lead financial rating agencies (Standard & Poor etc) to downgrade Oman’s rating to the BB range.