Oman plans to borrow and tap its financial reserves to plug this year’s projected fiscal deficit as the Arabian Gulf country continues to be hit by low oil prices.
The plans are in the country’s 2017 budget, which was decreed yesterday by Sultan Qaboos with immediate effect.
Oman, the biggest oil producer in the Middle East outside Opec, is projecting a fiscal deficit of 3 billion Omani rials (Dh28.65bn) for this year, lower than the forecast deficit of 3.3bn rials for last year, or 13 per cent of GDP. However, in the first 10 months of last year, Oman overshot its projections and posted a fiscal deficit of 4.8bn rials.
The country is forecasting expenditures at 11.7bn rials and revenue at 8.7bn rials for this year, compared with last year’s projections of 11.9bn riyals in expenditure and 8.6bn rials in revenue.
Oman plans to plug this year’s projected deficit by borrowing 2.1bn rials from international markets, 400 million rials from domestic markets and 500m rials from drawing down its own financial reserves.
Oman has slashed energy and water subsidies and raised fees and taxes to help shore up government revenue that has dwindled because of the oil price rout.
The price plunge and tighter spending have affected growth, which is forecast to have slowed to 1.8 per cent last year, from 3.3 per cent in 2015, according to the IMF. It is expected to pick up to 2.6 per cent this year, according to the fund.
Oman joins other Gulf countries that are tightening their purse strings and unveiling plans to lower their fiscal deficits in the age of weak oil prices. Gulf countries have trimmed their energy subsidies, raised electricity and water tariffs, and introduced plans to impose a value-added tax starting 2018 as part of measures aimed at containing spiralling deficits.
Some of the most drastic and ambitious measures announced were in Saudi Arabia, which revealed last year a 2020 National Transformational Programme aimed at weaning itself off oil income.
In Saudi Arabia, this year’s deficit is forecast to shrink by a third to 198bn Saudi riyals (Dh193.86bn), or 7.7 per cent of GDP, with the government aiming to post a “balanced” national budget by 2020. The kingdom posted a deficit of 297bn for last year, 9 per cent lower than its initial estimate and 19 per cent reduction on 2015’s record shortfall of 367bn.
Qatar also expects to post a lower fiscal deficit of 28.3bn riyals (Dh28.54bn) this year, compared with a projected deficit of 46.5bn riyals in 2016, its first in 15 years.
dalsaadi@thenational.ae
* with agencies
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