Muscat: Oman’s Ministry of Finance has announced an OMR500 million cut in the State Budget.
Since the beginning of 2020, the Ministry of Finance has issued 13 financial circulars and a set of directives to government units to cut down the volume of spending from their respective shares of State Budget 2020.
Khalid bin Saif Al Busaidi of the Finance Ministry’s Department of Financial Policies said that the sharp slump in international oil prices (below the $30 band) will significantly batter budget estimates of anticipated revenue, promoting the Ministry of Finance to take action accordingly.
The ministry explained that the current measures were necessary to achieve financial sustainability and stability, said Al Busaidi, adding that the government takes gradual steps to ensure proper follow-up of implementation by various departments while at the same time realizing balance between the desired financial and economic objectives.
The Ministry of Finance, among similar procedures taken earlier, issued circulars to implement a 5 percent reduction in allocations approved for civil, military and security departments, in addition to a 10 percent cut of approved liquidity for the developmental budget. The ministry’s approval has to be sought before floating any new projects (tenders) or entry into any other financial obligations without prejudice to financial dues of firms or importers partnering with the government.
These measures, Al Busaidi said, can effect a reduction worth close to OMR 500 million of estimated spending of the State Budget 2020. The Ministry of Finance also issued instructions to rationalise spending in government firms, including 10 percent or more cut in operation budgets and rescheduling of project execution by advancing government priorities during the current stage.
He pointed out that although these measures might be capable of bypassing the current crisis, they may not hold for long if oil prices keep sliding because budget 2020 estimates were based on the calculation of the average oil price being $58. The current actual oil price of less than $30 will gravely deepen budget deficits.
The government is embarking on revising the undertaken procedures, pondering further financial and economic measures, Al Busaidi reaffirmed, noting that State Budget 2020 estimated revenue at OMR 10.7 billion and spending at OMR 13.2 billion, with the remaining OMR 2.5 billion deficit to be addressed.