Oman’s budget deficit crosses OMR4b-mark on falling oil revenue

Muscat: Oman's budget deficit for the first seven months of 2016 rose by 68.3 per cent to OMR4,023.3 million, as plunging crude oil export revenues started affecting fiscal balance, according to data released by the National Centre for Statistics and Information (NCSI).
This is against a deficit of OMR2,391.1 million for the same period of last year and against a projected deficit of OMR3.3 billion for the entire year, as estimated by the government.
“At the moment, the government has been borrowing from both domestic and international markets (to cover deficit). And this year, a sizable chunk of the borrowing was from overseas market as the government does not want to disturb the local liquidity,” said a leading market analyst, on condition of anonymity.
The country’s net oil revenue for the seven-month period ending July, 2016 plunged by 46.1 per cent to OMR1,794.1 million from OMR3,326.2 million for the same period of last year.
This was mainly on account of a 37.4 per cent dip in the average price of Oman Crude at $37.6 per barrel for the first eight months, against $60.2 per barrel for the same period last year. Revenue from natural gas also came down marginally by 3.5 per cent to OMR778.9 million for the eight-month period.
“The average price of Oman Crude at $37.6 per barrel was 16 per cent lower than the budget estimate at $45 per barrel,” added the market analyst. The government is likely to look at more austerity measures and will cut subsidies wherever possible, the analyst noted.
The market analyst also noted that it would take some time to get benefits from investment in non-oil sectors. The Sultanate has been taking major measures to strengthen its non-oil sectors, especially the industrial and mining sectors.
The overall crude oil production of the country grew by 3.1 per cent to 244.79 million barrels for the eight-month period, which was equivalent to an average of 1,003,200 barrels per day.
On the expenditure side, there was a 3.3 per cent fall in total expenditure that stood at OMR6,663.8 million during the seven month period, against OMR6,889.9 million for the same period of last year.
Oman government’s expenditure and revenue for 2016 are estimated at OMR11.9 billion and OMR8.6 billion, respectively.