Economy rebounds with 8.7 pc growth

MUSCAT, July 8 – The Sultanate’s economy rebounded and recorded a broad-based recovery with a growth of 8.7 per cent during 2017. This was confirmed in the latest report by the Central Bank of Oman (CBO), which says, “The recovery in oil prices and positive results of diversification efforts conditioned the broad-based uptick in the economy.” Oil prices made further gains and the price of Omani crude oil averaged $62.9 a barrel during January-April 2018 as against $51.6 a barrel during the same period last year.

Initial figures released by the apex bank showed the fiscal deficit at RO 610.6 million in the first two months of the current year. While revenues rose 17.2 per cent to reach RO 1.13 billion, net oil revenues rose 24.3 per cent to RO 749.2 million. The current price of crude hovers just under $75. According to the April bulletin from CBO, the hydrocarbon and non-hydrocarbon sectors witnessed a growth of 20.8 per cent and 3.9 per cent, respectively, during the previous year. “The government continued with fiscal consolidation through rationalisation of its expenditure and augmenting both tax and non-tax revenues,” the report pointed out.

The fiscal reforms undertaken include reduction in fuel and water subsidies, hike in corporate taxes and several user fees. “Inflationary conditions in Oman generally remained benign with the average annual inflation based on consumer price index from January to April 2018 at 0.6 per cent,” said the report. Oman’s original budget plan for 2018 was to spend RO 12.5 billion with revenues of RO 9.5 billion and a deficit of RO 3 billion with an average assumption of oil price of $50 per barrel.

Non-oil and gas revenues are projected to be RO 2.7 billion, amounting to an increase of 5 per cent from the 2017 budgeted revenue. Corporate tax revenue is projected to increase by 25 per cent to RO 500 million in 2018 compared with RO 400 million budgeted in 2017. The increase is due to a rise in corporate tax rate from 12 per cent to 15 per cent and abolition of the exemption limit of RO 30,000.