Cutting Oman's $8.3M deficit is a bitter pill to swallow

Published December 23rd, 2015 - 10:00 GMT

Oman’s budget deficit amounted to 3.26 billion riyals (Dh31 billion) until the end of the October, compared to a surplus of 189.6 million riyals in the same period of last year, according to the Ministry of Finance figures.

The deficit has been attributed to lower oil export prices, according to Al Zaman daily newspaper.

Public spending dropped by 4.4 per cent, reaching 7.9 billion riyals last October, compared to 10 billion riyals during the same period last year.

The current spending witnessed a rise by 0.2 per cent, due to the spending increase in the civil ministries by 3.3 billion riyals compared 3,2 billion riyals last year.

Furthermore, spending on defence and national security fell by 5.7 per cent, reaching 2.5 billion riyals, compared to 2.7 billion riyals last year.

The total revenue from oil, estimated to be 4.6 billion riyals, fell 45.6 per cent during the month, compared to 8.6 billion riyals in the same period last year, according to a report by the National Centre for Statistics and Information.

Gas revenues, meanwhile, jumped 1.1 per cent to 1.17 billion riyals during October, compared to 1.16 billion riyals in the corresponding period last year.

Customs tax revenues increased by 2.9 per cent, reaching 175.9 million riyals in October, compared to 171 million riyals in the same period last year, whereas corporate income tax declined by 1.2 per cent to reach 10.3 million riyals in the same period.

In October, Oman considered major reforms in order to cut spending and increase revenues amid an oil price slump that has resulted in a significant rise in the country’s deficit.

The measures being studied by the cabinet include the levying of taxes on expatriate remittances, increasing taxes on real estate rent contracts, as well as rises in electricity tariffs, traffic fines, vehicle registration, renewal and insurance fees, according to media reports.

Expatriate remittances stood at 35 billion riyals in the past five years, according to the Ministry of Finance’s figures.

Oman has no plans to cut fuel subsidy, Darwish Bin Esmail Al Beloushi, Minister Responsible for Financial Affairs, told the country’s Shura Council in November.

He added that living standards of citizens are guaranteed and cannot be touched.

The minister said the decline in oil prices was due to market forces and “we have to be more cautious and there is no need to be pessimistic as Oman has swift response for all changes,” Al Beloushi said.

Subsidies on petroleum products, including petrol and diesel, are estimated to have cost Oman an estimated 900 million riyals (Dh8.56 billion) in 2015, compared to 840 million riyals in 2014.

By Fahad Al Mukrashi

 


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