Higher crude output coupled with a sharp rise in oil prices allowed Oman to record one of its largest fiscal surpluses in the first 11 months of 2011 despite an increase in actual expenditure, according to official data.
After registering a deficit of around RO287.4 million (Dh2.75 billion) in the first 11 months of 2010, the Gulf country’s budget balance turned into a massive surplus of RO1,156.7 million (Dh11.09billion) in the first 11 months of 2011, showed the figures by the Omani ministry of national economy.
The massive surplus was mainly a result of a 65per cent rise in oil export earnings to nearly RO7.96 from RO4.89 billion due to a sharp rise in crude prices and Oman’s oil production to nearly 885,000 barrels per day from 864,000 bpd in the same period. High oil income boosted the country’s total actual revenue by about 47 per cent to RO10.32 from RO7.02 billion.
Actual public expenditure swelled by nearly 19.5 per cent to RO7.63 billion from around RO6.38, the report showed.
A breakdown showed current expenditure expanded by 18.9 per cent while capital spending grew by 10.3 per cent. There was also an increase of 2.2 per cent in allocations for oil production and 11.7 per cent for gas.
In a recent report, the Abu Dhabi-based Arab Monetary Fund (AMF), a key Arab League establishment, expected Oman to record a much higher fiscal surplus through 2011 because of an increase in its crude output and nearly 40 per cent rise in oil prices above its budgeted price of $58 a barrel.
Oman, which is not an OPEC member, had projected a shortfall of RO850 million when it announced its record 2011 budget early last year.
But it massively revised up the gap to RO1,850 million after Sultan Qaboos approved new jobs and hefty pay rises for Omani government employees in response to demands during unrest in February 2011.
In its latest report, Oman’s central bank said that the budget deficit for 2011 was revised up following approval of extra spending in April.
It said the 2011 budget was based on an average crude oil price of $58 and production of 896,000 barrels per day. Sitting atop five billions of proven oil reserves, Oman expects to boost spending in its 2011-2015 development plan by a whopping 113 per cent as it expects high oil prices and is pursuing plans to boost crude output.
Announcing the eighth development plan last year, Oman’s Minister of National Economy Ahmed bin Abdulnabi Mekki said it would aim to create between 200,000 and 275,000 jobs for Omanis, who have become a majority in their country after they were a minority two decades ago.
“The plan envisages spending of RO30 billion, nearly 113 per cent above the budgeted spending in the previous plan,” he said.
He said development expenditure would be as high as RO112 billion, including around RO5.6bn on new projects and the rest for development plans and ventures that were approved during the seventh five-year scheme.