Falling revenue and rising spending cut Oman’s net budget surplus by 82% y/y to OMR 610mn (USD 1.6bn) in the first eleven months of 2013, the statistics office said in a preliminary estimate. Total revenue fell 0.7% y/y to OMR 12.787bn and public spending rose 1.7% y/y to OMR 9.753bn.

The “Actual expenditures under settlement” under the finance ministry’s methodology totalled OMR 2.423bn. NOTE: Oman’s finance ministry is using the terminology “Actual expenditures under settlement” whose sum was deducted from the total, or gross, budget surplus.

Net oil income (after transfers to the Reserves Fund) rose just 0.9% y/y to OMR 9.749bn following a 2.2% increase at end-October. Oil proceeds accounted for 76.2% of total revenue.

Gas proceeds, however, dropped 5.6% y/y to OMR 1.33bn over the period. Oil and gas income remain the main contributor to Oman’s state budget despite efforts to cut the country’s volatile dependency on the hydrocarbon sector. Corporate tax receipts rose 12.7% y/y to OMR 381mn as Oman’s non-oil sector remain strong despite its small contribution to the overall GDP. Customs duties shrank 18.5% y/y to OMR 172mn on lower imports whereas other revenues fell 9.9% y/y to OMR 1.123bn in January-November.

Lower spending on military and defence cut current spending by 0.9% y/y to OMR 5.8bn at end-November (down 2.5% y/y at end-October). Some OMR 2.642bn (down 9.5%) were spent on the security forces and OMR 2.74bn on civil ministries (up 6.4%). Capital spending rose 6.0% y/y to OMR 2.42bn in January-November.

Oman plans to sell sovereign Islamic bonds in 2014 to finance its budget needs and potential deficits in the future.