Source: Emirates 24|7
Deficit turned into surplus after surge in oil prices and output
A surge in crude prices allied with a slight increase in oil production to allow Oman to record a large fiscal surplus in the first two months of 2012 despite a rise in actual expenditure, according to official data.
After registering a deficit of RO67.3 million (Dh666 million) in the first two months of 2011, the Gulf country’s budget balance turned into a huge surplus of RO768 million (Dh7.6 billion) in the first two months of 2012, showed the figures by the Omani ministry of national economy.
The surplus was mainly a result of a 43.4 per cent rise in oil export earnings to nearly RO1.53 billion from RO1.07 billion due to a sharp rise in crude prices and a slight increase in Oman’s oil production to nearly 888,800 barrels per day from 887,100 bpd in the same period, the report showed.
The price of Oman’s crude soared to $109 a barrel from $88 in the same period and this boosted the country’s total actual revenue by about 30.8 per cent to RO1.85 billion from around RO1.42 billion.
Gas revenue, including LNG sales from the liquefaction plant in the southern port of Sur, also surged by 23.6 per cent to RO205.1 million from RO160 million.
Actual public expenditure swelled by nearly 7.7 per cent to about RO1.08 billion in from nearly RR one billion, the report showed.
A breakdown showed current expenditure expanded by about 16 per cent while capital spending declined by around 17.5 per cent, mainly in civil ministries development spending and civil ministries capital expenditure. Allocations for oil production jumped by nearly 34 per cent in the same period.
Oman, which is not an OPEC member, recorded a large fiscal surplus of RO864.8 million (Dh9.26 billion) in 2011 due to higher crude prices and output against an actual deficit of about RO48.8 million (Dh468 million) in 2010.
Oman had projected a shortfall of RO850 million when it announced its record 2011 budget early last year. But it massively revised up the gap to RO1,850 million after Sultan Qaboos approved new jobs and hefty pay rises for Omani government employees in response to demands during unrest in February 2011.
Sitting atop five billions of proven oil reserves, Oman expects to boost spending in its 2011-2015 development plan by a whopping 113 per cent as it expects high oil prices and is pursuing plans to boost crude output.
Announcing its 2012 budget, the government projected record high spending of RO10 billion and revenue at RO8.8 billion, leaving a shortfall of RO1.2 billion.
Quoted by the official Omani news agency, oil minister Mohammed bin Hamad Al Rumhi said the 2012 was based on a record high oil price of $75 and crude output of 915,000 bpd, which he expected to be achieved this year.
He said the breakeven oil price for Oman’s budget this year would be around $90 on the basis of an expected increase in the country’s actual spending.
“If average oil prices surpassed that level through 2012, then Oman will be able to achieve a surplus in its budget,” he said.