Muscat – With the government set to keep the local fuel price stable at the October 2021 rate till the end of the year despite sharp increases in global oil prices, the total fuel subsidy bill of the sultanate is likely to exceed RO600mn for the financial year 2022.
In November 2021, following directives of His Majesty Sultan Haitham bin Tarik, to provide relief to consumers, the retail fuel price was capped at the October 2021 rate till the end of 2022.
At a media briefing on budget performance in 2021 held on Wednesday, Sultan bin Salim al Habsi, Minister of Finance, highlighted the effects of the higher oil prices on the economy. “The fuel subsidies for the current financial year will exceed RO600mn after the government capped the price. This expenditure was not planned in the 2022 budget.”
Due to higher international oil prices, the government continues to cover the difference in fuel prices. As a result, the fuel subsidy bill jumped to RO67.3mn at the end of March 2022, compared to just 7.6mn in Q1 2021, ONA reported on Saturday.
Habsi also stated that the government paid dues of the private sector to restart development projects that had come to a halt in the last two years as a result of the COVID-19 pandemic. “The government has worked to pay the dues of the private sector to enable it to implement additional development projects.”
According to Abdullah bin Salim al Harthi, Undersecretary in Ministry of Finance, preliminary financial results until the end of May 2022 indicate that the state’s public revenues totalled RO5.325bn, while public expenditures amounted to RO4.694bn, resulting in a budget surplus of RO631mn.
The state’s general budget in 2021 saw a 26.9 per cent increase in revenues to RO11.195bn compared to the budgeted amount of RO8.640bn.
“The 2021 budget recorded an increase of 52.1 per cent in oil revenues compared to the approved budget. Gas revenues amounted to RO2.629bn – an increase of 40.6 per cent accounting for RO1.870bn – of the approved budget,” Harthi said.
Actual non-oil revenues decreased by 8.3 per cent at the end of 2021 compared to the approved budget estimate. Non-oil revenues represent 26.4 per cent of the total revenues in 2021.
The undersecretary confirmed that the total expenditure on development projects for civil ministries amounted to RO1.192bn, an increase of 32.4 per cent – or RO900mn – compared to the budgeted allocations in 2021.
“The actual deficit at the end of 2021 was RO1.223bn, registering a decrease of 45.4 per cent from the estimated budget deficit of RO2.240bn as a result of the improvement in oil prices and rise in oil revenues,” Harthi said.
Total public debt in 2021 stood at RO20.774bn, an increase of RO956mn, or 4.82 per cent, as a result of the continuing gap between revenues and public spending.