Oman’s fiscal surplus to widen in 2011
By staff - Sun Jul 31, 7:22 am
Country’s GDP growth to pick up to 4.4% in 2011 from 4.2% in 2010.
A surge in oil prices is expected to widen Oman’s fiscal surplus through 2011 despite a sharp increase in spending following new jobs and pay rises for national civil servants, according to official figures.
The country, which is not an OPEC member, had projected a shortfall of RO850 million ($2.2 billion) when it announced its record 2011 budget early this year.
But it massively revised up the gap to RO1,850 million ($4.8 billion) after Sultan Qaboos approved new jobs and hefty pay rises for Omani government employees in response to demands during unrest in two months ago.
“Preliminary actual data for 2010 showed that Oman’s budget recorded a surplus of 3.2 per cent of GDP against a deficit of 3.1 per cent in 2009,” the Abu Dhabi-based Arab Monetary Fund (AMF) said in its quarterly bulletin.
“Initial estimates show that the surplus will expand this year compared with the previous fiscal year due to higher oil revenue….the surplus will increase despite a large rise in public spending announced by the government for this year.”
In its latest report, Oman’s central bank said that the budget deficit for 2011 was revised up following approval of extra spending in April.
The central bank said the 2011 budget was based on an average oil price of $58 and production of 896,000 barrels per day.
Experts expect Oman to exceed that output target this year while oil prices could average nearly double the level forecast in the Omani budget.
In 2010, a sharp rise in oil export earnings depressed Oman’s fiscal deficit by more than 92 per cent despite a large increase in public spending.
Oman had reported a massive surplus in the first half of 2010 before it turned into a shortfall due to overspending and transfer of part of the oil revenue to the state reserve fund. From around RO680.3 million ($1.76 billion) in 2009, the budget deficit tumbled to nearly RO48.4 million ($125.8 million) in 2010, a decline of 92.9 per cent, according to the ministry of national economy.
Before the transfer to the reserve fund, the balance was in surplus, according to the AMF, a key Arab League organization.
The report cited Omani government figures which showed high crude prices boosted the country’s revenue in the first two months of 2011 by 17.1 per cent to RO1,417 billion ($3.68 billion) compared with the first two months of 2010. Actual expenditure leaped by 63.8 per cent to RO1,484 billion ($3.85 billion).
Its forecasts showed Oman’s real GDP would grow by around 4.4 per cent this year compared with 4.2 per cent in 2009 as a result of higher public spending, and the increase in oil prices and production by the Gulf nation. Inflation is projected at about 3.5 per cent.