Government subsidy decrease by 62%

27 February 2021

Muscat (WAF): The government’s subsidy for basic services amounted to 239 million Omani Rials at the end of November 2020, compared to 634.9 million Omani Rials at the end of the same period in 2019.

Oman’s National Center for Statistics and Information (NCSI) data showed that the government “Participation and Support” decreased by 62.3% on an annual basis. The item covers the government subsidies to housing and development loans, electricity subsidy, water subsidy, and fuel subsidy. The actual government participation and support by the end of 2019 amounted to RO808 million.

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The item accounted for only 2.4% of total government spending of RO9.9 billion. In contrast, it constituted 5.58% of government spending until the end of November 2019.

The decrease in the item’s expenditures came despite the expansion in development lending during the year 2020 as part of government measures to limit the effects of the Covid 19 pandemic on the Omani economy, especially to small and medium enterprises.

As of January 2021, the government has started cutting the electricity and water subsidies, the move will result in a further drop in government participation and support.

It is worth noting that the budget for the current year 2021 assumes that the government support for basic services will reach RO775 million. The budget, approved in January, shows allocations to support the electricity sector amounting to RO500 million Omani, the drinking water sector with RO90 million, the wastewater services with RO86 million, the waste management sector with RO64 million, and fuel subsidies worth RO35.

The state budget also allocates an additional RO25 million to subsidise development and housing loans.