MUSCAT // Oman needs to borrow up to US$10 billion (Dh36.7bn) to pay for this year’s forecasted deficit, an official from the country’s central bank said on Wednesday.
The sultanate is 3bn rials (Dh29.2bn) in debt due to overspending in the last three years and is “in panic mode”, said independent financial analyst Ali Al Habsi.
“Oman spends too much money on expensive projects such as air transport, civil ministries expenditure and railway projects ... expenditure [in the last three years] went out of control. It relied on petrol prices to bounce back but that did not happen,” he said.
The official from the Central Bank of Oman said the sultanate plans to borrow between $7bn and $10bn from international banks and bonds.
“It will be a combination of syndicated loans from international banks and bonds. The money from the bonds will be raised at home and abroad,” the official said.
In January, the finance ministry said the government planned a string of steps this year to boost non-oil revenues, including income tax rises, new taxation of goods such as tobacco and alcohol, and changes to fees charged for hiring foreign workers. But the removal of petrol subsidies in January sparked the first protest by Omanis since 2011, with crowds gathering last month in front of the ministry of oil and gas to demand a freeze on fuel prices.
The government backed down shortly after, capping the cost of regular petrol at its February price.
Oman announced tenders in 2010 to build four new airports in different parts of the country and expand two others, Muscat and Salalah, which has so far cost the government more than $15bn. To achieve Omanization targets, the civil ministries spend about 60 per cent of the country’s total annual budget on wages and perks.
Adding to the country’s financial problems, the 2016 budget was based on an oil price assumption of $45 a barrel – $6 more than the actual average price of oil per barrel in Oman last year.
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