Oman sticks to growth targets with 2019 fiscal budget, analysts say

Analysts said that Oman’s 2019 budget keeps its economic development targets on track. AFP

Oman sticks to growth targets and prioritises the welfare of its civil servants with its 2019 budget, analysts say, after the country announced a budget expenditure of 12.9 billion rials ($33.5 billion) on Monday.

This year’s spending is about 3.1 per cent higher than in 2018. The 2019 deficit is forecast at 2.8 billon rials, slightly lower than last year’s deficit of 3 billion rials. The government’s revenues in 2019, based on an oil price of $58 per barrel, has been set at 10.1 billion rials.

Analysts said that Oman’s 2019 budget keeps its economic development targets on track.

"Many expected the government would slow down in spending in the current economic scenario but this is a very brave budget that has bigger spending than in 2018. It is all about keeping the economic targets going in education, health and infrastructure," Hamed Al Busaidy, an economic analyst working for Oman Capital Development based in Muscat, told The National.

The statement from the official Oman News Agency said that 86 per cent of the deficit will be financed by bank borrowing and the remaining will be covered by withdrawing from the state reserve funds.

According to its figures, 76 per cent of expenditure will be on salaries paid to civil servants, which is about a 5 per cent increase from the 2018 budget.

Other analysts said that the government had in mind the welfare of its working-class citizens when it put together this year’s budget.

“The civil servants make up about 70 per cent of total workers in the country and most of them are Omanis. The 2019 spending will make sure the government will keep on paying the civil servants already working in the ministries. Their welfare is important and Oman doesn’t want to be caught in the middle ... when oil prices go down below the $58 per barrel target,” Khalifa Al Subhi, a retired investment banker, said.

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Oman is the biggest non-Opec oil producer in the Middle East, pumping out about 970,000 barrels per day. It was severely affected by the oil slump that took place in 2015. The country’s average oil price income in 2018 was at $62 per barrel, a drop from $120 per barrel in 2014.

“Oman may have a little problem reaching the revenues forecast for 2019 but it might pull it off since at $58 per barrel, things might swing its way, unless oil prices fall below that that level,” Mr Al Subhi added.