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Oman’s government published the 2016 General State Budget by royal decree 2/2016 on January 1. The government plans to cut subsidies on utility bills, housing loans, fuel and other goods by almost two thirds this year, trim government spending and develop non-oil revenues to help tackle a budget deficit caused by a fall of more than 50 per cent in revenues due to low oil prices, the finance ministry said in a statement to Oman New Agency.

The new budget projects a deficit of OMR3.3 billion for 2016 or 13 percent of gross domestic product (GDP), down from a deficit of OMR4.5 billion for 2015. Total state spending for 2016 is projected at OMR11.9 billion, down 11 percent from actual spending in 2015 and total revenues projected at OMR8.6 billion down 4 percent from 2015.

A package of austerity measures contained in the budget include postponing the award and execution of low priority projects and cut-backs on expenditure by ministries and government units such as limiting travel, entertainment and overseas training, cancelling family cars and tour vehicles allocated for ministers, undersecretaries and senior officials and prohibiting the use of government cars after office hours.

The government plans to cover OMR1.5 billion of the deficit from reserves, to raise OMR1.2 billion in borrowing from international and domestic markets, and the balance from GCC grant aid. The Budget also envisages the privatisation or disinvestment of government-owned companies in line with a programme under Oman’s 9th Five Year Plan 2016-2020 period also issued on January 1, 2016 under royal decree 1/2016. The programme is aimed at expanding the participation of private sector in acquisition, finance and management of projects through public private partnerships (PPP). The preparation of a PPP framework is currently underway.

(The item is compiled from media reports and does not represent advice, comment or commentary of AMJ)