* Fresh budget includes fresh austerity steps and tight curbs on spending
* Move due to low oil prices, which are hurting state revenues
* String of steps planned to boost non-oil revenues
Oman’s government released a 2017 budget plan on Sunday that projected a smaller deficit but included fresh austerity steps and tight curbs on spending because of low oil prices, which are hurting state revenues.
Government spending this year is projected to total 11.7 billion rials ($30.4bn) and revenues 8.7bn rials, which would result in a deficit of 3bn rials.
That compares with the government’s original 2016 budget plan of 11.9bn rials in spending, 8.6bn rials in revenues and a 3.3bn rial deficit.
Boosting non-oil revenue
The finance ministry said the government planned a string of steps this year to boost non-oil revenues, including changes to income tax, new taxation of goods such as tobacco and alcohol, and changes to fees charged for hiring foreign workers.
Tax exemptions for companies will be cut, electricity tariffs raised for large corporate and government consumers, and fees amended for some services provided by ministries and government bodies.
Shares in two telecommunications firms, Oman Telecommunications and Ooredoo Oman, fell sharply on Sunday after they said the royalty which they paid to the government had been raised to 12 per cent from seven per cent.
“Due to the financial pressure on the state budget caused by public salaries, openings for new jobs in the public sector will be limited. It will be up to the private sector to create jobs and employ job seekers,” the ministry said.
Oman lacks the ample oil and fiscal reserves of its wealthy neighbours and its finances have been hit hard by the plunge of oil prices since 2014. In 2015, its deficit was worth 16.5 per cent of gross domestic product, according to the International Monetary Fund.
The 2017 budget assumes an average oil price of $45 a barrel. The ministry said it would cover the deficit this year with 2.1bn rials of international borrowing, 400 million rials of domestic borrowing and the drawdown of 500m rials from financial reserves.
Oman has said it plans to sell stakes in a string of state companies over the next several years. Procedures to sell shares in the first of these, Muscat Electricity Distribution Co, will be completed in the first half of 2017, the ministry said.
The 2016 budget was also based on an oil price assumption of $45 a barrel but, partly because oil actually averaged $39 last year, the deficit came in much higher than expected at about 5.3bn rials.