Oman budget deficit nearly halves in Jan-May as oil income surges

Oman’s state budget deficit nearly halved in the first five months of this year as higher oil prices boosted export revenues sharply and a corporate tax hike took effect, figures released by the official statistics agency showed on Monday.

The government’s deficit in January-May shrank to OMR1.10bn ($2.86bn) from OMR2.04bn a year earlier.

Oman’s financial position is among the weakest of the wealthy Gulf oil exporters, so the data may reassure investors in its debt. The International Monetary Fund has predicted it will run a fiscal deficit of 5.7 per cent of gross domestic product this year, down from 11.4 per cent in 2017.

Net oil revenues jumped to OMR2.38bn in the first five months from OMR1.77bn a year earlier. Brent crude averaged $70.22 a barrel during the period, up from $53.75.

Meanwhile, revenues from corporate income tax climbed 24 per cent to OMR352.3m after the government lifted the tax rate to 15 per cent from 12 per cent.

The government also recorded a leap in proceeds from the sale of assets to OMR75.4m from OMR6.8m. The agency did not say which assets had been sold.

Total state expenditure including expenditures under settlement, or funds that had been allocated but not yet disbursed, dropped 3 percent to OMR5.19bn.

The government continued to spend heavily on development projects designed to create jobs and diversify the economy beyond oil and gas exports. However, “participation and support”, which includes state subsidies, fell to OMR189.6m from OMR319.2m. Oman cut fuel subsidies this year to ease the burden on state finances.

Read: Oman lifts spending in 2018 budget

The agency released January-May public finance figures after a gap of three months in publication of the monthly data. It did not give a reason for the gap.

Data released on Monday for March, April and May implied a five-month deficit of OMR753.4m, rather than the OMR1.10bn which the agency reported. The agency did not respond to a request for an explanation of the difference.

Oman’s original 2018 budget plan projected spending of OMR12.5bn this year, revenues of OMR9.5bn and a deficit of OMR3.0bn, and assumed an average oil price of $50 per barrel.