Oman has increased its 2020 budget spend by OR300 million ($780m) to OR13.2 billion ($34.4bn).
The budget, which is the final year of the ninth Five-Year Development Plan (2016-2020), is focused on the five promising sectors, logistics, manufacturing, tourism, fisheries and mining sectors, with the aim to increase economic diversification efforts away from a reliance on hydrocarbons.
Spending on investment projects, particularly job creation projects, is expected to reach OR5.3bn ($13.8bn), out of which OR2.7bn ($7bn) will be paid by state-owned enterprises (SOEs) for service and industrial projects, whereas an amount of OR1.3bn ($3.4bn) will be spent by various government entities for infrastructure projects.
In addition, OR1.3bn ($3.4bn) will be allocated for oil and gas production, according to the Ministry of Finance document.
Housing loans provided by Oman Housing Bank is set to increase to 1,587 by the end of 2020, with a total amount of OR80m ($208m) compared with 1,375 housing loans offered in 2019 worth OR60m ($156m).
The 2020 budget is based on an oil price of $58 per barrel.
The budget statement warned: “In spite of improvements experienced by oil markets in 2019, the State’s General Budget is still facing challenges posed by oil price fluctuations. This is due to the fact that oil revenue remains the main source of revenue for Oman. Therefore, any decline in oil prices will eventually have an impact on the 2020 Budget performance and national economy.”
The government expects a deficit of OR2.5bn ($6.5bn) in 2020, slightly lower than the OR2.8bn ($7.3bn) projected in the 2019 budget.
Some 80 percent of the 2020 deficit will be funded through foreign and domestic borrowing, while the remainder will be funded by drawing from reserves, the state news agency ONA said.
According to the National Centre for Statistics and Information (NCSI), the country’s GDP grew by 1.3 percent at constant prices by the end of June-2019, and non-hydrocarbon activities rose by 2.8 percent. It is expected that GDP will grow to no less than two percent in 2019, and will continue to grow to three percent in 2020.
Aggregate revenue is estimated at OR10.7bn ($427.8bn), increasing by six percent as compared with estimated revenue for 2019 and accounting for 33 percent of GDP.
This consists of oil and gas revenue of OR7.7bn ($20bn), representing 72 percent of total revenue. Non-hydrocarbon revenue is estimated at OR3bn, up 13 percent compared with the 2019 budget, due to higher tax revenue by nine percent and non-tax revenue by 18 percent.