The Oman budget is approved with expenditure of OMR (Omani Rials ) 12.9 billion (USD33.5billion)
which is made from Defense and security (Police and associated services) OMR3,450; Oil and gas production OMR2,230; Government Ministries OMR4,490; Infrastructure Development (airports, hospitals, roads etc) OMR1,325; Others OMR1,405 (perhaps the continuing subsidies on food and fuel).
Income is OMR 10.1 billion (US Dollars26.2billion) from Oil OMR5,465; Gas OMR1,980 and other revenues (taxation, service charges and so on) OMR2,655.
The deficit of OMR2.8 billion (US Dollars 7.27 billion) represents almost 22% of total government expenditure or as the Times of Oman says 9% of Oman’s GDP demonstrating the extraordinarily high impact the government has in Oman’s economy and spending.
The Oman Observer notes that “The budget is the main driver of the national economy”. It also says that it will “Support Small and Medium Enterprises (SMEs) by allocating some of the government projects to SMEs”. Costs associated with the employment of Government employees is budgeted at OMR3.5 billion.
Note should be taken that the introduction of VAT is planned in the future and probably the government already has administrative readiness to do so, however, all indications are that the private sector is far from ready.
Investment spending in 2019 is expected to be OMR3.7 billion including infrastructure and state-owned companies. Financial support for 325,000 (Omani) individuals to negate the implementation of the elimination of fuel subsidy will continue. Subsidies overall are budgeted at OMR745million and included in the ‘others’ section.
These figures in 2018 were OMR12.5billion expenditure, Income 9.5billion and deficit 3billion a 24% deficit; the actual spending was OMR13.2 billion, 6% more. In 2017 they were OMR11.7 billion expenditure and income OMR8.7 billion giving a OMR3billion deficit of 25%. In 2016 expenditure was budgeted at OMR11.9 and income at 8.6billion a OMR2.7billion deficit (the actual deficit was reported at OMR 5.01billion ).
The 2019 budget was dependent on an oil price of USDollars 58 per barrel. The deficit looking to borrow OMR 2.4 billion rials borrowing will cover 86% of the country’s 2.8 billion-rial shortfall, with the remaining OMR 400 million taken from reserves. The focus of the Budget is stated to be by the Oman Observer “Fiscal sustainability and balancing of revenue and expenditure / Prioritising spending in line with the available financial resource / Keeping the deficit within a sustainable level and reducing public debt.
The budget deficits over the last 4 years of OMR11.5 billion is greater than projected government income in 2019 and helps explain why Fitch rating company the gave Oman Government bonds a non-investment rating, this rating increases the cost of borrowing as greater interest is demanded to cover assumed risks. Oil prices will need to maintain their strength to enable Oman to maintain its projected deficit.