A surge in oil prices and higher crude output turned Oman’s projected negative fiscal balance upside down to record its highest ever surplus in 2011 despite an increase in actual spending, according to official data.
Oman, which is not an OPEC member, had projected a shortfall of RO850 million (Dh8.2 billion) 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.
Government data showed the balance turned into an actual surplus of RO961.5 billion (Dh92 billion) by the end of 2011 compared with an actual deficit of RO439.8 billon (Dh4.3 billion) in 2010.
“The high surplus was a result of higher revenue from oil and gas exports despite an increase in public spending last year,” the Abu Dhabi-based Arab Monetary Fund (AMF) said, citing Omani official estimates.
It said higher oil prices and production by Oman boosted its GDP growth to 4.4 per cent last year from 4.2 per cent in 2010.
The surge in crude prices and supplies pushed Oman’s public revenue by a whopping 46 per cent to nearly RO11.43 billion in 2011 over the previous year. Expenditure also soared by about 26.6 per cent to RO10.47 billion.
According to Oman’s ministry of economy, 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 forecasts 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.