The Sultanate’s budget deficit, which amounted to RO 456.6 million by the end of February 2021, is within “controllable limits”, the Ministry of Finance (MoF) noted here on Sunday.
In its latest monthly bulletin, the Ministry pointed out that the 2021 Budget earmarks a sizable RO 1.2 billion for public debt servicing, which will be settled per an approved payment schedule.
“Oman has set within its financing plan to cover a budget deficit of RO 2.2 billion and repay principal of a loan of RO 2 billion.
Consequently, the total required financing for this year amount to RO 4.2 billion, which is planned to be obtained through various financing instruments, in addition to an amount of RO 600 million withdrawn from Oman Investment Authority (OIA),” the Ministry noted in its newsletter, titled ‘Fiscal Performance’.
Total financing obtained for the first three months of this year, ending March 31, 2021, amounted to RO 2.37 billion, of which RO 1.77 billion represents total loans (including RO 600 million from OIA).
“This shows that Oman has successfully covered most of its financing needs. The remaining amount of RO 1.83 billion will be raised during the current year. By the end of February, an amount of RO 144 million paid for public debt servicing, and an amount of RO 563 million repaid for principal of some loans,” the Ministry explained.
The update comes as total public revenue slumped 21.6 per cent to RO 1.092 billion by the end of February 2021, the Ministry said.
The decline was primarily attributable to a 35 per cent drop in oil export revenue to RO 603.4 million (after deducting partners’ shares as per Exploration and Production Sharing Agreements (EPSA) during this period, down from RO 928.7 million for the corresponding period of last year.
Gas revenue also fell two per cent to RO 235.3 million this year, down from RO 240.3 million last year. On the other hand, current revenue increased 8.1 per cent to R0 240.5 million this year, up from RO 222.4 million for the corresponding period of last year.
Significantly, public spending was pared 8.8 per cent to RO 1.548 billion during the January – February 2021 period, down from RO 1.699 billion last year. “This is as a result of several factors, including a reduction in spending of various government units,” the Ministry said.
Also boding well for improvement in the momentum of economic recovery is the Economic Stimulus Plan endorsed by the government last month. The Plan, approved by His Majesty Sultan Haitham bin Tarik, aims to accelerate economic recovery and enhance economic activities performance affected by the Covid-19 pandemic and continued low oil prices, the Ministry said.
“In light of the current unfavourable conditions, the Government seeks, through the plan, to mitigate the implications of the pandemic on the national economy, notably the small and medium enterprises (SMEs) by providing an incentive package. Such package limits Government purchasing contracts worth less than RO 10,000 to SMEs only.
In addition, the Government has made some decisions within the plan to reduce some fees and tax rates in order to encourage the private sector to invest more in the economic diversification sectors,” the Ministry noted in the newsletter.
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