On the back of nearly five per cent reduction in total spending this year, Oman’s government managed to reduce the sultanate’s budget shortfall by 22.2 per cent in the January–July period of 2021 compared to the corresponding period of last year.
The sultanate’s budget deficit dropped to RO1.205bn in the first seven months of 2021 from RO1.550bn in the same period of 2020.
‘As of end-July 2021, the budget deficit declined by 22.2 per cent compared with the actual deficit recorded in 2020. This reduction is reflected by an increase in public revenue and a decrease in public spending by the end of July 2021 as compared with the same period of 2020,’ the Ministry of Finance said in its monthly bulletin.
‘As the sultanate’s fiscal consolidation continues, the public spending continues to decline,’ the ministry added.
By the end of July 2021, total public spending amounted to RO6.420bn, down by 4.7 per cent compared with RO6.738bn in the same period in 2020, the data showed.
Oman’s 2021 state budget estimates a deficit of RO2.2bn for the full year, which is equivalent to 8 per cent of the sultanate’s GDP. The International Monetary Fund expects Oman’s fiscal deficit to sharply decline to 2.4 per cent of GDP for full year 2021 from around 19.3 per cent of GDP in 2020.
‘Oman’s fiscal and external balances are projected to improve considerably over the medium term. After deteriorating sharply in 2020 to a deficit of about 19.3 per cent of GDP, reflecting lower oil revenue and a slump in economic activity, the fiscal balance is projected to improve to -2.4 per cent of GDP in 2021,’ the IMF said in recently issued Article IV Mission statement.
The Fund expects Oman’s fiscal balance to move to a surplus over the medium term, with a substantial decline in the government debt. This substantial improvement in fiscal balance will be contributed mainly by higher oil prices and fiscal adjustment measures taken by the government.
Revenue edges up
Oman recorded a marginal increase in government revenue in the first seven months of 2021 as the average oil price during this period remained better compared with the same period a year ago.
The government’s total revenues in the first seven months of 2021 increased by 0.5 per cent to RO5.214bn compared with RO5.188bn recorded in the same period of last year, according to the Ministry of Finance.
Net oil revenue – which accounted for around 51 per cent of the government’s total revenues – inched up 0.2 per cent in the first seven months of 2021 at RO2.639bn compared with RO2.634bn in the corresponding period of 2020.
On the other hand, the
Ministry of Finance’s data showed that Oman’s gas revenue increased 13.6 per cent to RO935mn during the January–July period of this year compared with RO823mn in the same period a year ago. Current revenues sharply rose to RO1.614bn this year against RO1.196bn in the first seven months of 2020.
‘The current revenue increased by 34.9 per cent over the same period of 2020. This is attributable to the dividends worth RO613.3mn received from Oman Investment Authority,’ the ministry added.