EDO cuts $6 billion of Oman’s 2021 budget

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هذه الصفحة متوفرة بهذه اللغة: العربية

1 January 2021

MUSCAT (WAF)- Sultan Haitham bin Tariq of Oman has approved the state budget for 2021 with a total expenditure of RO10.88 billion ($28.3 billion), RO8.64 billion ($22.5 billion) in revenues, and the estimated deficit is RO2.24 billion ($5.7 billion).

For the first time, Oman state budget for 2021 does not include the oil and gas sector expenditures estimated at RO2.3 billion ($6 billion), the burden of which has been transferred to the newly-formed Energy Development Oman SAOC (EDO).

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State-owned EDO was established by royal decree in the first week of December 2020 to carry the weight of funding the oil and gas sector from the state budget. This includes the expenses of Petroleum Development Oman, the largest oil producer in Oman.

Oman’s budget for 2021 is based on an average oil price of $45 a barrel, and an average daily production of oil and condensate at 960,000 barrels. The OPEC+ member relies on boosting its condensates’ production to make-up for the agreed oil cuts by OPEC+, which extends until next year.

Speaking at the annual meeting of the state budget held on New Year’s Eve under embargo until the budget is approved on 1 January, the Ministry of Finance officials said that the government will cover 27% of the estimated deficit from reserves (Oman Investment Authority).

The government will finance the remaining deficit through external borrowing in particular.

The Ministry’s officials stated that the government will rely on Oman Investment Authority (OIA) to supply two types of income, the first is withdrawing from the reserves (approximately RO600 million). The second is about RO800 million of profits generated from State-Owned Enterprises (SOEs) owned by OIA, including corporate profits or the proceeds of the selling state-owned assets. OIA will supply between 1.2-1.4 billion Omani Rials to the state in 2021.