PANDEMIC IMPACTS: Sharp falls reported in hydrocarbon export earnings, customs duties and corporate income tax
Total Omani government revenues slumped by a significant 30.1 per cent during the January–November 2020 period, weighed down by sharp declines in hydrocarbon export earnings, customs duties and corporate income tax, the National Centre for Statistics and Information (NCSI) said in its latest bulletin.
Citing Ministry of Finance data, the NCSI report noted that state revenues plummeted to RO 6.926 billion during the first 11 months of 2020, versus RO 9.914 billion for the corresponding period of 2019.
The shortfall will inevitably contribute to an anticipated budget deficit for fiscal 2020, although reforms set out in the Medium Term Fiscal Balance (Tawazun) programme will help narrow this gap, say experts.
Net oil revenues, which typically keep state coffers well buoyed in a good year, plunged a hefty 42.2 per cent to RO 3.489 billion during the January–November 2020 timeframe, down from RO 6.035 billion in 2019.
Contributing to this disparity were two factors: the price of Oman Crude averaging a modest $46 per barrel in 2020, coupled with the cut in production in line with the Sultanate’s commitment to the OPEC+ Accord aimed at bolstering international oil prices.
Natural gas revenue also declined 19.6 per cent to RO 1.263 billion for the first 11 months of last year, down from RO 1.570 billion for the corresponding period of 2019.
Corporate income tax earnings fell 25.2 per cent to RO 451.5 million, down from RO 603.7 million a year earlier, reflecting the adverse impact of the pandemic and the protracted economic downturn on the performance of local businesses.
Customs duties also fell 23.9 per cent to RO 152 million last year, down from RO 199.6 million in 2019, again mirroring depressed imports on account of the twin crises.
But in line with pledges to pare government spending to help rein in the budget deficit, total public expenditure declined 12.4 per cent to RO 9.459 billion during the first 11 months of last year, versus RO 11.360 billion for the corresponding period of 2019.
Contributing to these spending cuts were defence and security (15.3 per cent), civil ministries (3.4 per cent), investment expenditure (29.2 per cent), and the sub-head covering ‘Participation and Support’, which includes subsidies (62.3 per cent).
With the government increasingly resorting to borrowings to finance the deficit, the interest on loans skyrocketed 38.9 per cent to RO 763.7 million last year, up from RO 550 in 2019.
Net loans totalled RO 1.166 billion during the January–November 2020 period compared to RO 1.284 billion in 2019. Withdrawals from reserves amounted to RO 500 million versus RO 400 million a year earlier. Together with about RO 80 million obtained in local loans, these borrowings and withdrawals amounted to RO 1.586 billion last year.
This figure, adjusted against a deficit of RO 3.023 billion for the January–November 2020 period, resulted in an ultimate shortfall of RO 1.436 billion, the NCSI report added.
As part of its plans to finance 2021 Budget deficit, the government obtained funding to the tune of RO 1.35 billion through external and local borrowings.
An additional amount of RO 600 million was withdrawn from Oman Investment Authority (OIA), the Sultanate’s integrated sovereign wealth fund, the Ministry of Finance noted in its ‘Fiscal Performance’ report issued last week.
CONRAD PRABHU
@conradprabhu
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