MoF: Corona costs Oman’s revenues $33.8 billion 

0
1534

هذه الصفحة متوفرة بهذه اللغة: العربية

22 October 2020

MUSCAT (WAF)- Covid-19’s toll on Oman’s revenues in the medium term will exceed 13 billion Omani Rials ($33.8 billion), data released by the Omani Ministry of Finance (MoF) to the media showed.

MoF’s data pointed out that the impact on the state revenues is caused by the further slide in oil prices in 2020, Oil production cuts, and the gross domestic product (GDP) drop.

Oman’s average oil price decreased from $ 63.6 per barrel in 2019 to below $50 as the average price until the end of November 2020 according to the Omani crude futures contract trading on the DME. In terms of reducing oil production, the Sultanate cut its oil output under the OPEC Plus agreement, which entered into force in May 2020 until April 2021. Accordingly, the Sultanate’s average daily production decreased from about 970 thousand barrels in 2019 to an average output by the end of September 2020 estimated at 953 thousand barrels daily according to the data of the National Center for Statistics and Information.

With regards to the impact on GDP in 2020 GDP in light of the pandemic, MoF estimates a decrease by about 4 billion Omani Rials (410.4 billion). Oman’s GDP was two billion Oman Rials ($5.2 billion) lower in the first half of this year compared to it at the end of June 2019 when it amounted to 14 billion Omani Rials ($36.4 billion) at current market prices.

MoF’s disclosure of the impact of the Covid-19 pandemic comes as the government is taking measures to cut spending and boost non-oil revenues in particular. In 2020, the Omani government reduced the budgets of government units and development budgets, suspended all new projects, referred long-serving Omanis who are 60+ or worked for 30 years to compulsory retirement, added more items to the list of goods subject to excise tax and increased it on alcoholic beverages.

The government has taken these measures- and additional steps are expected- to avoid a more gloomy picture of the oil-dependent country. MoF estimations for the medium term during the period from 2021-2025, absence of financial and economic reforms, shows an annual deficit exceeding RO5 billion ($13 billion). And that it will represent 16% of Oman’s GDP by 2025.

The Ministry’s estimations also indicate an annual increase in public debt, reaching more than 130% of GDP by 2025 compared to 61% in 2019, and an increase in interest on loans to reach 3 billion Omani Rials ($7.8 billion) in the same year.

Oman’s deficit amounted to 1.55 billion Omani Rials ($4.3 billion) at the end of July, and the GDP witnessed a decrease in the second quarter of the year by 13.4% on an annual basis. The revenues also have seen a drop of 19% at the end of July 2020 compared to the end of July 2019, while the Sultanate’s budget for the current year expected an increase in revenues to reach 10.7 billion Omani Rials ($27.82 billion), an increase of about 2.9% compared to the initial actual revenues for the year 2019.


Related stories:

Oman’s international bond issue is “market-conditioned”

Omani Ministry of Health approves new measures to cut spending

Oman deepens budget cut for 2020 to 10%

Oman to continue the additional oil output cut in July

Oman sets retirement age for SOEs at 60

Oman will not renew 70% of foreign consultant’s contracts

Oman’s budget deficit stood at $2.2 billion by the end of June

Omani Ministry of Finance: The approved measures to save 1 billion Omani Rials