Oman’s budget surplus declined 4.3% y/y to OMR 1.57bn (USD 4.1bn) in the first half of 2013 as both revenue and spending dropped, the statistics office said in a preliminary estimate. Total spending fell 4.4% y/y to OMR 5.51bn and revenue shrank 4% to OMR 7.08bn.
Oil and gas income remained the main contributor to Oman’s state budget. Net oil proceeds rose 0.2% y/y to OMR 5.29bn (75% of total revenue) in January-June. Gas proceeds, however, dropped 18% y/y to OMR 690mn. Oman based its 2013 OMR 12.9bn state budget on a conservative USD 85 per barrel oil price.
Lower spending on military and defence helped cut current spending by 1.8% y/y to OMR 3.38bn over the period. Some OMR 1.57bn (down 9%) were spent on the security forces and OMR 1.58bn on civil ministries (up 12%). Capital spending rose 8.1% y/y to OMR 1.3bn in January-June
An expected decline in oil prices will dent Oman’s fiscal and current account surpluses before turning into deficits as of 2015 and 2016, respectively, the IMF said in its latest Article IV report. The accumulated over the years fiscal buffers will provide initial cushion but will erode quickly, the IMF also warned. Oman’s fiscal surplus will reach 5.7% of GDP in 2013 before narrowing to 2.5% in 2014, the IMF forecast.
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