Oman is targeting to further reduce government spending in 2021 as the sultanate’s government seeks to trim its widening budget deficit amid the coronavirus pandemic and weak oil prices.

The sultanate’s general budget for the year 2021 estimates total revenues of RO8.64bn, a decrease of 19 per cent from estimated revenues in 2020. This year’s general budget is based on an average oil price assumption of US$45 per barrel.

As per the Ministry of Finance’s statement published by Oman News Agency, Oman’s new state budget estimates the government spending to decline to RO10.88bn in 2021, a reduction of 18 per cent from the approved spending of RO13.2bn in the 2020 state budget.

This year’s budget estimates a lower deficit of RO2.2bn, which is equivalent to 8 per cent of the sultanate’s GDP. The government plans to fund RO1.6bn of the total estimated deficit by local and foreign borrowings, while the remaining deficit (around RO600mn) will be funded through withdrawals from the reserves, the ministry’s statement said.

As per the Ministry of Finance’s statement, the sultanate’s public debt will reach to about RO21.7bn by the end of 2021 and the external borrowings constitutes for 76 per cent of the total public debt.

The ministry indicated that the general budget for 2021 was prepared according to the main objectives of the 10th five-year development plan (2021-2025) and Oman’s Vision 2040. The general budget for 2021 aims to increase non-oil revenues and reduce spending to achieve financial sustainability and to enable the national economy to continue in achieving targeted growth rates.

The Ministry of Finance noted that the sultanate’s government has taken a number of financial and economic measures to mitigate the negative impacts of the coronavirus pandemic and the continuous decline in oil prices.

In its statement, the ministry confirmed that the government will continue to complete the supporting infrastructures to stimulate economic growth and give priority in implementing the necessary projects.