Muscat: Oman’s economy will be on a growth trajectory from 2021 to 2040, Dr. Nassir Rahsi Al Maawali, Undersecretary of the Ministry of Economy said on Sunday.
Al Maawali explained that the rate of expected growth in Oman’s economy for this year, according to the International Monetary Fund, is expected to be 2.5 percent, the second best rate of growth in the GCC region..
Sultan Salim Al Habsi, Minister of Finance, has said that total general revenues of the State Budget 2022 are estimated at OMR10.58 billion, 6 percent higher than revenues expected due to be collected by the end of this year (2021). Oil and gas returns are set to comprise 68 percent of total revenues, against 32 percent for non-oil and gas revenues.
This was stated during a press conference organised by the Finance Ministry on Sunday to raise the level of transparency and outline the financial, economic, commercial and investment results, as well as the government’s approaches and general goals for next year.
Following the principle of precaution habitually espoused in financial policy, oil revenues are calculated on the basis of $50 a barrel, said Al Habsi, adding that the volume of general expenditure estimated for fiscal year 2022 stands at about OMR12.1 billion, with an expected 2 percent increase in spending during 2022, compared to expected spending as at the end of 2021.
This includes OMR1.3 billion as the cost of debt service. Al Habsi added that, “Deficit in 2022, estimated on the basis of $50 a barrel, will stand at OMR1.5 billion. It stands for 15 percent of total revenues and 5 percent of the Gross Domestic Product. It also falls within estimated deficit of the Medium Term Fiscal Plan. The cost of repayment of government loans in 2022 is expected to stand at OMR2.7 bn.”
Over the past few years, the national economy passed through a succession of financial hurdles: The recession of international oil prices due to the decline of global demand, the rise of general debt to record levels, the pandemic of coronavirus and the hike in cost of borrowing—which all caused a collective negative impact on Oman’s creditworthiness.
Preliminary indicators of the budget this year point to the possibility of achieving the lowest deficit since 2014, despite oil prices fluctuation, said Al Habsi.
Budget 2022 was drafted in conformity with the 10th Five Year Plan and Oman Vision 2040 and this requires taking all current precautions into account, he said.
The budget aims to achieve a number of economic and social goals, among them maintaining safe levels of government spending, giving priority to projects of economic and social objectives and finalising digital transformation, to name a few, he added.
Maintaining spending on basic services like education, health and social welfare figure high on the agenda of Budget 2020, the minister said, noting that, in case oil prices rise higher than the endorsed rate, priority will be given to the use of financial returns to cut down deficit and repay loans.
In his turn, Qais Mohammed Al Yousef, Minister of Commerce, Industry and Investment Promotion, said that the contribution of service activities to the GDP during the first half of this year stood at 51.7 percent, wholesale and retail 8.9 percent, real estate activities 8.3%, industrial activities 20.4 percent and converting industries 8.7 percent.
Al Yousef added that a new price guide for government service fees (aimed to facilitate procedures for service beneficiaries) will begin to be implemented with effect from next year, as a first phase, on the Ministry of Commerce, Industry and Investment Promotion, the Ministry of Heritage and Tourism and the municipalities sector.
For his part, Abdussalam Mohammed Al Murshidi, Chairman of Oman Investment Authority, said that more than 110 investment projects will be implemented in 2021 and 2022.
Al Murshidi added that the volume of actual investment spending stood at OMR2.6 billion in 2021. In 2022, the volume of spending is scheduled to stand at OMR2.9 billion through the expansion of current projects and the accommodation of new projects.
Speaking in detail, Al Murshidi said that, in 2022, the volume of investment spending in the tourism sector is expected to stand at OMR193 million, OMR57 million in the mining sector, OMR116 million in the logistics sector, OMR156 million in the sectors of communications and information technology, OMR99 million in the food sector, OMR54 million in the fisheries sector, OMR1.41 billion in the energy sector, OMR803 million in the general services sector and OMR52 million in sundry sectors.
Economy Minister Dr. Said Mohammed Al Saqri said that the ministry is working in cooperation with other government departments to provide stimulus initiatives. “The Economic Stimulus Programme is still valid and we are working to upgrade it,” said Al Saqri.
Meanwhile, Abdullah Salim Al Harthi, Under-Secretary of the Ministry of Finance, said that civil ministries’ spending in 2022 is estimated at OMR4.3 billion. He added that the state budget 2022, which target safe and sustainable levels of spending, gives priority to productive sectors. Al Harthy added that government investment spending during 2022 will reach OMR5 billion.