Budget deficit falls 53% in 2019 first half

The budget deficit has seen a drop of 53 per cent to RO 660.6 million in the first half of 2019, compared to a RO 1.4 billion during the same period last year.

Calculations based on the figures released by National Centre for Statistics and Information (NCSI), total government revenues rose 11.4 per cent to RO 5.515 billion between January and June, up from RO 4.948 billion during the corresponding period in 2018.

In the 2020 budget, the government expects a deficit of RO 2.5 billion, slightly lower than the RO 2.8 billion projected in 2019. The current budget is set on an assumed average oil price of $58 per barrel.

Experts attribute the improvement in the fiscal position mainly to a reasonable recovery in oil prices. The hydrocarbon revenues enlarged substantially, while the non-hydrocarbon revenue also witnessed some incremental growth.

“The increase in oil prices provided the much-needed support to government revenues. This is in addition to the prudent fiscal measures adopted by the government last year,” said a financial expert familiar budget matters.

In the 2020 budget, 80 per cent of the deficit will be funded through foreign and domestic borrowing, while the remainder will be funded by drawing from reserves.

According to the NCSI report, over the same time period, net oil revenues grew 5 per cent to RO 3.074 billion, compared to RO 2.929 billion last year. Gas revenues went up 9.3 per cent to RO 939.6 million.

At the same time, the total public expenditure fell by 2.8 per cent to RO 6.174 billion, from RO 6.353 billion a year ago. This was largely due to a 13.5 per cent reduction in investment expenditure.

The statistics shows that revenue from natural gas increased by 5.6 per cent to reach RO 793.5 million, compared to RO 751.6 million at the end of the same quarter of 2018.

The data also show that the total revenue from non-oil activities by the end of the second quarter of 2019 reached RO 9.6 billion — a decrease by about 3.4 per cent compared to the end of the same period in 2018.

The gross domestic product (GDP) at the current prices declined by about 1.9 per cent at the end of the second quarter of 2019, reaching RO 14 billion, compared to RO 14.3 billion at the end of the same quarter of 2018.

In foreign trade indicators, the NCSI data shows that due to a decline in the value of merchandise imports by about 9.5 per cent, which reached RO 4.5 billion, the surplus in the trade balance at the end of the second quarter of 2019 rose up by RO 424.4 million, compared to the end of the same quarter of the previous year, which reached RO 2.9 billion.

The value of merchandise imports decreased by the end of the second quarter of 2019 by 0.6 per cent, recording RO 7.4 billion, compared to RO 7.5 billion at the end of the same quarter of 2018.

In the monetary situation indicators, the total domestic liquidity (M2) increased by 4 per cent at the end of the second quarter of 2019, recording about RO 17.3 billion, compared to RO 16.6 billion at the end of the same quarter of the previous year. The money supply (M1) increased by 0.1 per cent, recording about RO 5.26 billion.

The total deposits of the private sector increased by 4.6 per cent at the end of the second quarter of 2019, recording about RO 14.9 billion, compared to RO 14.2 billion in the same quarter of the previous year.

The total value of loans and financing granted by the commercial banks and Islamic windows increased by 5.9 per cent at the end of the second quarter of 2019, reaching RO 25.7 billion, compared to RO 24.3 billion at the end of the same quarter of the previous year of 2018.

The total value of personal loans also increased by 2.4 per cent, recording RO 8.5 billion, while the average interest rate on total credit reach was 5.4 per cent compared to 5.2 per cent at the end of the same quarter of the previous year.

The total value of foreign assets in the Central Bank of Oman declined by 0.1 per cent, recording about RO 6.12 billion by the end of the second quarter of 2019, compared to RO 6.13 billion at the end of the same quarter of 2018.

The purchasing power of the Omani Rial increased by 1.2 per cent by the end of the second quarter of 2019, as the real exchange rate index scored about 104.7 points, compared to about 103.5 points at the end of the same quarter of the previous year.