The Omani government will borrow up to OMR 1.03bn from overseas markets in a bid to ease the country’s economic troubles in 2016.
The sultanate, one of the worst-hit countries by the oil price drop in the Gulf Cooperation Council, will seek around $2.6bn in foreign loans as its budget deficit hits OMR 3.3bn ($8.6bn) for 2016.
Around OMR130m will be used to repay maturing loans this year, giving an overall net flow of OMR 900m, according to The Times of Oman.
Domestic borrowing will remain at OMR 300m in an attempt to maintain liquidity and ease pressure on local banks.
Last week, the government announced a budget deficit of OMR 3.3bn for 2016. This will be plugged by OMR 600m from net grants, OMR 300m from domestic borrowing, and OMR 1.5bn from general reserves, alongside the OMR 900m from foreign borrowing.
Following this, finance ministers unveiled a raft of spending cuts, which included cancelling government-sponsored vehicles for employees, reviewing the vehicle fleets of ministries and postponing ‘unnecessary projects’.
These will come alongside the deregulation of fuel prices and increases to corporation tax and fees for government services.
“Diversifying the revenue base and reducing dependence on oil while being rational in our spending is central. To this end, withdrawal of fuel subsidy will not only reduce the budget burden, but should bring positive change in our consumption behavior. Research demonstrates that subsidies encourage over consumption. In addition a number of other austerity measures announced should help in creating an atmosphere of cost consciousness,” said EY Oman office manager Ahmed Amor Al-Esry on the budget.
Of the GCC countries, Oman has suffered the most following the drop in oil prices. Oil and gas account for 75 per cent of its total revenues.
The country’s non-oil revenues are expected to grow marginally from OMR1.5bn in 2015 to OMR 2.45bn this year.