Oman’s Finance Ministry is looking at cutting expenditure again in the state budget for next year to reduce a deficit caused by low oil prices, sources briefed on the ministry’s thinking told Reuters on Tuesday.
A draft budget for 2017 foresees a 5 per cent cut in spending from this year’s budget, and no increase in revenues, the sources said. The draft assumes an average oil price of $45 per barrel.
The ministry declined to comment on its 2017 budget plan, which is expected to be released around the end of this year or early next.
The 2016 budget envisaged state expenditure of OMR11.9bn – down 11 per cent from actual spending in 2015 – and revenues of OMR8.6bn; officials said their 2016 economic plans also assumed an average oil price of $45.
So far, however, the deficit has come in higher than projected, totalling OMR4.4bn in the first nine months.
Financial Affairs Minister Darwish al-Balushi briefed the Shura Council, a top advisory body to the government, on the draft budget in a closed-door session last month, the sources said.
Oman cut benefits for employees of state agencies this year as part of its austerity drive. The 2017 draft budget proposes more cuts to public sector bonuses but foresees no immediate reductions to salaries, according to the sources.
The government has said it aims to privatise a range of state assets to boost revenues, but Balushi did not mention specific privatisation plans in his briefing, the sources said.