Oman budget gap rises to $658m in Q1

Tuesday, 12 July 2011 00:00 - - {{hitsCtrl.values.hits}}

Muscat, Reuters: Oman’s budget deficit jumped to 253.4 million rials ($658.2 million) in the first three months of the year as rising oil revenue failed to offset increasing state spending, finance ministry data showed on Sunday.

The small non-Opec oil producer, which was hit by several public protests this year, booked a gap of 67.2 million rials in January-February.

The three-month shortfall amounted to around 1.1 percent of the sultanate’s gross domestic product, according to Reuters calculations, compared with a 421.2 million surplus, or 1.9 percent of GDP, in the same period last year.

“I still think that the underlying budget situation in Oman is fairly healthy. With oil prices at these levels, there should be more than enough revenue to account for the extra spending measures,” said Daniel Kaye, senior economist at the National Bank of Kuwait. Revenue reached 2.3 billion rials, accounting for 32 per cent of the full-year plan, driven by oil exports, which make up for over 75 percent of the overall budget income, the data showed.

The Sultanate’s expenditures stood at 1.7 billion rials in January-March, or 21 percent of the 2011 budget plan. Actual expenditure under settlement reached an additional 843.5 million rials.

In December, Oman projected record expenditure of 8.1 billion rials in its 2011 budget, up 13.2 percent from the previous year.

However, protests prompted Sultan Qaboos bin Said, who has ruled Oman for 40 years, to promise a $2.6 billion spending package in April.

Oman based its initial 2011 budget on a projected oil price of $58 per barrel and expected a deficit of 850 million rials.

Its finance minister said last month spending will soar 11 percent compared to the original plan on social measures.

He also said a $10 billion aid package pledged to Oman by its wealthier Gulf neighbours to help stem unrest was unlikely to take off this year. The country, whose hydrocarbon-based economy is forecast to expand by 4.1 percent in 2011, sold its crude at an average oil price of $95 per barrel in January-May.

Analysts polled by Reuters in June expected Oman to post a surplus of 4.8 percent of GDP this year.

The usually tranquil Gulf state was hit by protests in February and March, following uprisings that toppled rulers in Egypt and Tunisia. Omanis called mainly for higher wages, more jobs and an end to graft.

Some 100 people demonstrated in the Omani industrial city of Sohar on Friday demanding the release of their colleagues who were jailed for protesting earlier this year.