[Oman-L] Oman budget for 2008

[Joachim Duester]

Oman unveils RO400m deficit budget   
from: Khaleej Times, 2 January 2008

Oman yesterday unveiled a RO400 million deficit budget
for 2008, stressing that the growth-oriented financial
plan reflected the country's commitment to build a
"modern national economy " that was in tune with rapid
global changes.

The budget, drawn up on an assumed price of $ 45 per
barrel of oil, forecasts revenues of RO5.4 billion and
expenditure of RO5.8 billion, compared with RO4.5
billion and RO4.9 billion, respectively, for 2007.

Oil and gas incomes constitute 78 per cent of the
total revenues, while current and capital revenues
account for the balance.

The Minister of National Economy Ahmed bin Abdulnabi
Macki, giving details of the new budget at a news
conference, said earnings from oil were estimated on
the assumption of an average oil price of $ 45 per
barrel, against $ 40 last year, and production of
790,000 barrels per day. The actual average price of
Oman oil in 2007 was $ 65.15 a barrel.

Income from oil will bring in about RO3.6 billion this
year, or 67 per cent of the total. Gas will fetch
RO620 million, 11 per cent of total revenues. Current
and capital revenues are estimated to reach about
RO1.2 billion, up 26 per cent over 2007.

The total estimated expenditure of RO5.8 billion is 19
per cent or RO910 million more than last year. Current
civil expenses are projected at about RO1.9 billion,
an increase of RO305 million over last year's
estimates.

Oil and gas production costs will claim RO1.3 billion,
representing 23 per cent of the total and an increase
of 12 per cent over 2007. Development projects will
receive RO725 million, 45 per cent more than last
year.

Allocations for defence and security have been raised
to RO1.4 billion from RO1.24 billion

Subsidies to the electricity sector in the 2008 budget
amounts to RO118 million and to the water sector RO61
million. A sum of RO249 million has been allocated for
government participation in various public-private
sector ventures. The share of the health and the
educational sectors amounts to 49 per cent of the
total current expenditures. Education has been
allocated RO710 million, a hike of RO101 million over
2007, and health RO228, an increase of RO29 million.

An amount of RO30 million has been set aside for
financial assistance to 48,499 cases covered by the
social security system.

The projected shortfall of RO400 million, the same as
originally estimated for 2007, works out to seven per
cent of revenues and three per cent of GDP. The
deficit will be met with withdrawals from the general
reserve fund in case revenues fall short, Macki, who
is also Deputy Chairman of the Financial Affairs and
Energy Resources Council, said.

High oil prices ensured that, instead of a deficit,
Oman wound up 2007 with a substantial surplus,
estimated at RO1.7 billion. "This surplus will be
utilised to strengthen the financial reserves of the
government, as well as paying up some of the actuarial
dues of the retirement funds, " Macki said. He added
he expected the price of oil to continue its upswing
this year.

"One of the positive indicators in the budget for 2008
is the decline in the percentage of the deficit from
the total revenues and from GDP, " he added. He said
the new budget reflected "the government's commitment
towards building a modern national economy with
competitive capabilities that can go along with the
current fast transformations taking place in the
international arena. "

Speaking about the economy's performance last year,
Macki said GDP grew by 11.6 per cent at current
prices, mainly because, he added, of the surge in
crude prices and pragmatic economic and monetary
policies followed by the government.

Reuters adds: Oman is planning three new domestic
airports to boost the tourism industry in the Gulf
Arab state, government officials said yesterday. The
airports will be built in the southern towns of Adam,
Haima and Shaleem, minister Ahmed Macki told a news
conference. "This will help the tourism sector," said
Darwish Al Balushi, secretary general of the Ministry
of Finance. Macki said the government has allocated 17
million rials ($ 43.86 million) for consultancy
studies, design and supervision of the proposed airports.