(MENAFN- The Peninsula) Oman's finance ministry released a state budget for 2015 yesterday that raises spending at the cost of a big projected deficit due to the plunge in oil prices.
Government expenditure this year is estimated at RO14.1bn ($36.6bn), up 4.5 percent from last year's original plan, the ministry said. Revenues are projected at RO11.6bn, down 1 percent, leaving an anticipated deficit of RO2.5bn, equivalent to about 8 percent of Oman's annual gross domestic product. The ministry said it would look at a range of ways to cover the shortfall. Grants from foreign donors could provide RO200m, international loans OR200m, borrowing from the local market RO400m, state reserve funds RO700m, and previous years' surpluses RO1bn.
The state finances of all the Gulf oil exporters have been hit by the halving of crude prices in the past six months, with Brent crude now standing at about $57 a barrel. But Oman's oil resources are not as ample as those of its bigger neighbours and it has not built up their huge fiscal reserves, so it is more vulnerable than most. The government has been spending heavily to build industrial projects and infrastructure to diversify the economy beyond oil, and it ramped up social spending to maintain stability after the 2011 Arab Spring uprisings elsewhere in the region. It appears to have decided it cannot cut either form of spending sharply.
The ministry statement did not specify the oil price assumed in its budget calculations, and a regular annual news conference by Financial Affairs Minister Darwish Al Balushi to discuss the budget was cancelled without explanation yesterday.
The ministry's statement did not explain how it could limit this year's drop in revenues to 1 percent if oil prices stayed around $60; oil accounts for about four-fifths of revenues.
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