Prudent cost-cutting measures help rein in 2020 public expenditure: MoF
Published: 04:08 PM,Aug 13,2021 | EDITED : 02:08 PM,Aug 14,2021
Actual revenues accruing to the Omani government in 2020 reached to RO 8.503 billion, representing a 20.5 per cent (RO 2.197 billion) decline from budget estimates for the year.
“The reduction was mainly due to a decline in oil and gas revenue by RO 1,902.3 million as a result of lower average crude oil price of $47.6 per barrel over the assumed price of $58 per barrel in 2020 Budget. This is in addition to the consequences triggered by the Covid-19 pandemic,” the Ministry of Finance (MoF) stated in its latest bulletin.
Despite the commitment of the Government to pay the deferred payments from previous years with a value of RO 283 million, the actual total spending in 2020 remained lower than the budgeted figures by RO 274.3 million i.e. 2.1 per cent, the Ministry noted.
On the other hand, actual public spending in 2020 totalled RO 12.925 billion for 2020, which was 2.1 per cent lower than the estimate of RO 13.2 billion in the budget.
“This reduction comes in line with the precautionary measures taken by the Government to mitigate the effects of lower oil prices and the Covid-19 pandemic. The measures have helped to reduce development expenditure of Government civil units by 11 per cent compared with the approved budget,” the Ministry said.
Still, allocations towards subsidy and other contributions climbed 29.5 per cent to help meet “additional needs and settle pending payments of previous years”, it stated.
The actual deficit in 2020 increased to RO 4.422 billion, up by 76.9 per cent as compared to 2020 budget deficit of RO 2,500 million due to a sharp drop in oil and non-oil revenues over the budgeted figures, the Ministry said.
This was covered by external and local funding, accounting for 88.7 per cent of the total deficit, while an amount of RO 500 million was withdrawn from Oman Investment Authority (OIA) to cover the remaining 11.3 per cent of the actual deficit of 2020.
Commenting on the pronouncements of international ratings agencies on the Omani economy, the Ministry noted that S&P Global Ratings had affirmed, in its credit rating report released in April 2021, its 'B+/B' long- and short-term foreign and local currency sovereign credit ratings on Oman.
“The outlook is stable. S&P expects economic and fiscal pressures on Oman to ease from the current year,” it said.
In its report issued in May 2021, Fitch affirmed Oman at ‘BB-’. Fitch predicts that the budget deficit will narrow to 6.1 per cent of GDP in 2021, and projects growth to strengthen to 3.3 per cent in 2022.
Furthermore, Moody’s upholds Oman’s credit rating at Ba3 according to the report issued recently in July.
Moody’s projects real GDP growth from -2.6 per cent in 2020 to 2.6 per cent in 2021 and 3.5 per cent in 2022. It also forecasts budget deficit to improve from -18.1 per cent in 2020 to -3.6 per cent in 2021.
“The reduction was mainly due to a decline in oil and gas revenue by RO 1,902.3 million as a result of lower average crude oil price of $47.6 per barrel over the assumed price of $58 per barrel in 2020 Budget. This is in addition to the consequences triggered by the Covid-19 pandemic,” the Ministry of Finance (MoF) stated in its latest bulletin.
Despite the commitment of the Government to pay the deferred payments from previous years with a value of RO 283 million, the actual total spending in 2020 remained lower than the budgeted figures by RO 274.3 million i.e. 2.1 per cent, the Ministry noted.
On the other hand, actual public spending in 2020 totalled RO 12.925 billion for 2020, which was 2.1 per cent lower than the estimate of RO 13.2 billion in the budget.
“This reduction comes in line with the precautionary measures taken by the Government to mitigate the effects of lower oil prices and the Covid-19 pandemic. The measures have helped to reduce development expenditure of Government civil units by 11 per cent compared with the approved budget,” the Ministry said.
Still, allocations towards subsidy and other contributions climbed 29.5 per cent to help meet “additional needs and settle pending payments of previous years”, it stated.
The actual deficit in 2020 increased to RO 4.422 billion, up by 76.9 per cent as compared to 2020 budget deficit of RO 2,500 million due to a sharp drop in oil and non-oil revenues over the budgeted figures, the Ministry said.
This was covered by external and local funding, accounting for 88.7 per cent of the total deficit, while an amount of RO 500 million was withdrawn from Oman Investment Authority (OIA) to cover the remaining 11.3 per cent of the actual deficit of 2020.
Commenting on the pronouncements of international ratings agencies on the Omani economy, the Ministry noted that S&P Global Ratings had affirmed, in its credit rating report released in April 2021, its 'B+/B' long- and short-term foreign and local currency sovereign credit ratings on Oman.
“The outlook is stable. S&P expects economic and fiscal pressures on Oman to ease from the current year,” it said.
In its report issued in May 2021, Fitch affirmed Oman at ‘BB-’. Fitch predicts that the budget deficit will narrow to 6.1 per cent of GDP in 2021, and projects growth to strengthen to 3.3 per cent in 2022.
Furthermore, Moody’s upholds Oman’s credit rating at Ba3 according to the report issued recently in July.
Moody’s projects real GDP growth from -2.6 per cent in 2020 to 2.6 per cent in 2021 and 3.5 per cent in 2022. It also forecasts budget deficit to improve from -18.1 per cent in 2020 to -3.6 per cent in 2021.