Deficit hits four-year low in November

MUSCAT, Feb 10 – The public finances in the Sultanate continue to show positive signs, with the budget deficit showing its lowest level at the end of November 2018. Driven by a boost in Oman’s oil and gas revenues, the budget deficit from January to November last year shrank to RO 1.878 billion.
A major highlight of the state finances during the period is the 620.8-per cent jump in capital revenue, which reached RO 121.1 million from RO 16.8 million in the corresponding period in 2017. According to the National Centre for Statistics and Information (NCSI), this shows a drop of 43 per cent as against RO 3.296 billion during the same period in 2017.
The 2019 budget, with a deficit of RO 2.8 billion or 9 per cent of the GDP, is based on an average oil price assumption of $58 per barrel.
Prices released by Dubai Mercantile Exchange last Thursday show Oman oil price for April delivery reached $62.68 per barrel.
The average price of Oman crude stood at $57.33, which is $8.95 per barrel against January 2018 delivery.
According to analysts, the current oil price augurs well for the budget as it can contain the deficit in the projected period.
“Any price above $58 will have a positive impact on the budget. The present price is good for the general finance of the country. This will also help cut the deficit within the budgeted period,” said an analyst with a brokerage firm.
The net revenue during the 11-month period from January to November surged to RO 9.6 billion, while the expenditure stood at RO 7.9 billion. Revenue from the corporate tax too showed a rise of 25 per cent to reach RO 439.7 million as against RO 350.7 million in the previous year.
According to NCSI figures, oil revenue posted a surge of 45 per cent to reach RO 5.88 billion until November 2018 as against RO 4.05 billion during the same period in 2017.
Gas revenues increased to RO 1.97 billion, showing a 33.7-per cent rise.
According to the budget estimates, spending is projected to increase modestly to RO 12.9 billion in the current fiscal with an increase of RO 400 million from the estimated expenditure for 2018.
While total revenues are estimated at RO 10.1 billion, the budget is based on a conservative oil price of $58 per barrel, which is almost near to the average price realised during the first 10 months of 2018.