Oman 2018 state budget lifts spending
Oman 2018 state budget lifts spending
The budget projects spending of 12.5 billion rials ($32.5 billion) this year, up from 11.7 billion in the original budget for 2017, local media quoted a Finance Ministry statement as saying.
Revenue is projected at 9.5 billion rials, up from 8.7 billion in the 2017 budget. That leaves a planned deficit of 3 billion rials this year, the same as last year’s projected deficit.
The 2018 budget assumes an average oil price of $50 per barrel, up from an assumption of $45 for 2017. The Brent oil price is now above $65, so Oman’s revenue is likely to be significantly higher than expected if oil prices stay flat.
Nevertheless, the budget projects a deficit of 10 percent of gross domestic product in 2018, well above levels which economists consider sustainable in the long run.
The Finance Ministry said on Monday that it needed to continue raising expenditure to boost economic growth and living standards, while building social housing and providing other assistance to lower-income citizens.
With smaller oil and financial reserves than its wealthy neighbors, Oman has been spending heavily on industrial and infrastructure projects in an attempt to diversify its economy beyond oil exports.
That strategy has not reassured rating agencies. Last month, Fitch Ratings cut Oman by one notch to BBB-minus — just above junk territory — with a negative outlook, citing the budget deficit. Standard & Poor’s already rates Omani debt as junk.
Of the projected 3 billion rial deficit in 2018, 500 million rials is to be covered by withdrawals from financial reserves and the rest through external and domestic borrowing.
Oman’s actual state budget deficit for the first 10 months of 2017 narrowed to 3.20 billion rials from 4.81 billion rials a year earlier, the latest Finance Ministry data showed.
Finance Ministry sources told local media last week that Oman would delay the introduction of a 5 percent value-added tax until 2019, instead of imposing it in 2018 as originally planned, to give tax administrators and companies more time to prepare. However, Oman will impose a new tax on sugary drinks and tobacco products by mid-2018.
The ministry said on Monday that it would proceed with a privatization program and was working to sell some state companies in 2018.
The government announced several years ago that it would launch a major privatization scheme but there has been little progress since.
Saudi Aramco aims to buy controlling stake in SABIC: Sources
- Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals firm, has a market capitalization of 385.2 billion Saudi riyals
- The potential acquisition would affect the time frame of Aramco’s planned initial public offering set for later this year
DUBAI: Saudi Aramco aims to buy a controlling stake in petrochemical maker SABIC, possibly taking the entire 70 percent stake owned by Saudi Arabia’s sovereign wealth fund, two sources familiar with the matter told Reuters.
Late last week Aramco confirmed a Reuters report that it was working on a possible purchase of a “strategic stake” in Saudi Basic Industries Corp. (SABIC) from the Public Investment Fund, the kingdom’s top sovereign wealth fund.
Aramco’s initial thinking is to buy the full stake owned by the Public Investment Fund (PIF), but if that fails to materialize Aramco could end up with a stake in SABIC of more than 50 percent, making it a majority owner, the sources said.
No final decision has been made on the size of the stake as the discussions are still at a very early stage, they added.
Aramco declined to comment. The PIF did not respond to a Reuters request for comment.
Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals firm, has a market capitalization of 385.2 billion Saudi riyals ($103 billion).
The potential acquisition would affect the time frame of Aramco’s planned initial public offering set for later this year, the state oil giant’s chief executive, Amin Nasser, said in a TV interview on Friday.
Aramco plans to boost investments in refining and petrochemicals to secure new markets and sees growth in chemicals as central to its downstream strategy to cut the risk of an oil demand slowdown.
Aramco plans to raise its refining capacity to between 8 million and 10 million barrels per day, from around 5 million bpd now, and double its petrochemicals production by 2030.
Aramco, the world’s largest oil producer, pumps around 10 million bpd of crude oil.