06:58 pm - Sunday 24 May 2015

$10bn GCC aid unlikely to start in 2011: Oman

By staff - Sat Jul 02, 6:22 am

A $10 billion aid package pledged to Oman by its wealthier Gulf neighbours is unlikely to take off this year and the sultanate’s spending will soar 11 percent on social measures, its finance minister said on Wednesday reports Trade Arabia.
“According to the (aid) plan announced it will be $1 billion per annum. But this is at the moment not part of the 2011 budget because it is still in the process and discussions,” Darwish Al-Balushi told reporters on the sidelines of a conference.

“A lot of work needs to be done in terms of identifying the projects and programmes,” he said.

Asked whether the aid disbursements were going to begin next year, he said: “Hopefully.”

Balushi also said earlier on Wednesday that Oman’s economy should grow by 5 percent this year if oil prices stay at current levels, above analysts’ forecast of 4.1 percent. Oil prices have been hovering between $84 and $115 per barrel since the beginning of the year.

Gulf oil exporters unveiled a $20 billion aid package in March for the sultanate and for Bahrain, which has been hit by wider unrest, to help ease social tensions threatening stability in their own countries. It did not release details of the programme.

In December, Oman projected record expenditure of 8.1 billion rials ($21.1 billion) in its 2011 budget, up 13.2 percent from the previous year. However, protests prompted Sultan Qaboos bin Said, who has ruled Oman for 40 years, to promise a $2.6 billion spending package in April. He also announced plans to create 50,000 new jobs among other measures.

Al-Balushi said on Wednesday the budget spending was now expected to rise to 9 billion rials ($23.4 billion) this year. “Due to the additional financial commitment in response to the social demands … we expect that we will end up break-even covering our regular budget deficit plus additional expenditure,” he said.

The government originally set its 2011 budget with a deficit of 850 million rials, or 3.8 percent of gross domestic product, based on a conservative oil price estimate of $58 per barrel.

A finance ministry official told Reuters in June that Oman expected 2011 spending to be about 20 percent higher than previously planned.

Analysts polled by Reuters in June expected Oman to see a fiscal surplus of 4.8 percent of GDP this year. When asked if the government planned any sovereign bond issue this year, Al-Balushi said: “No, not at present. When we prepare next year’s budget … we might be able to talk about any sovereign financing.”

Oman, which issued only small development bonds in the past, has the lowest government debt among Gulf oil exporters at a mere 5.1 percent of its annual economic output in 2010.

When asked about next year’s budget, Al-Balushi said: “This year’s budget is expansionary. The next year will depend on how we forecast the oil price.” – Reuters

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