Subsidy allocations to stay at elevated 2022 trend

MUSCAT: Fuel subsidies for Fiscal 2023, as well as financial support to vulnerable segments of the Omani population, will be maintained roughly at the same levels as in 2022, figures released by the Ministry of Finance show.

Allocations towards ‘Total Contributions & Other Expenses’ – a budgetary subhead predominantly made up of government subsidies – amount to RO 1.830 billion for 2023, broadly mirroring last year’s total of RO 1.898 billion. The latter figure itself represents a steep 77 per cent jump over the 2022 Budget allocation of RO 1.071 billion earmarked at the start of the year – a sharp increase that underscored government efforts to strengthen its safety net in the face of rising prices triggered by inflationary pressures and the knock-on effects of the Ukraine conflict.

Also contributing to the increase was a spike in energy related subsidies that climbed to a total of RO 725 million for the year, especially as the government decided to keep motor fuel prices capped for the entirety of 2022.

Significantly, electricity tariffs applicable to Omani homes will continue to be subsidized in line with a government decision to delay the complete rollback of support for the sector until 2031. Accordingly, a subsidy of RO 485 million has been earmarked for the power sector under the 2023 General Budget. This compares with an allocation of RO 500 million towards the electricity sector in the 2022 Budget.

The Social Protection Net gets an allocation of RO 384 million this year – a sizable outlay that includes, among other things, grants towards job security, training and reskilling, retirement benefits and other gestures.

Other sectors benefiting from government subsidy are: Transport (RO 84 million), Water (RO 75 million), Sewerage Services (RO 60 million), Oil Products (RO 39 million), SME & Other Economic Activities (RO 45 million), Food Commodities (RO 25 million), and Development & Housing Loan Interest (RO 23 million).

Additionally, around RO 200 million in funding has been earmarked for Development Projects under the ‘Total Contributions & Other Expenses’ subhead. A further RO 400 million has been set aside as interest on sovereign debt payable during the year.