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.
Oil prices edge up, but set for weekly loss on inventory build, US-China trade row
- US crude stocks last week climbed 6.5 million barrels, the fourth straight weekly build, almost triple the amount analysts had forecast
- An unprecedented volume of Iranian crude oil is set to arrive at China’s northeast Dalian port this month
SINGAPORE: Oil prices nudged higher on Friday on signs of surging demand in China, the world’s second-biggest oil user, though prices are set to fall for a second week amid concerns of the ongoing Sino-US trade war is limiting overall economic activity.
Brent crude oil futures were trading at $79.51 per barrel at 0521 GMT, up 22 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 19 cents, or 0.3 percent, at $68.84 a barrel.
For the week, Brent crude was 1.1 percent lower while WTI futures were down 3.5 percent, putting both on track for a second consecutive weekly decline.
Refinery throughput in China, the world’s second-largest oil importer, rose to a record high of 12.49 million barrels per day (bpd) in September as some independent plants restarted operations after prolonged shutdowns over summer to shore up inventories, government data showed on Friday.
The refinery consumption may rise through the fourth quarter as several state-owned Chinese refiners return to service after maintenance.
Undermining the strong refinery data, China did on Friday report its weakest economic growth since 2009 in the third quarter, with gross domestic product expanding by only 6.5 percent, missing estimates.
The weak economic data raised concerns that the country’s trade war with United States is beginning to have an impact on growth, which may limit China’s oil demand.
The trade war concerns combined with surging US oil stockpiles reported on Thursday are capping the day’s price gains.
US crude stocks last week climbed 6.5 million barrels, the fourth straight weekly build, almost triple the amount analysts had forecast, the US Energy Information Administration said on Wednesday.
“EIA Weekly Petroleum Status Report was a complete shocker sending Oil markets spiraling lower amidst some concerning development for oil bulls,” said Stephen Innes, head of trading APAC at OANDA in Singapore.
Inventories rose sharply even as US crude production slipped 300,000 barrels per day (bpd) to 10.9 million bpd last week due to the effects of offshore facilities closing temporarily for Hurricane Michael.
Meanwhile, Iranian oil exports may have increased in October when compared to the previous month as buyers rush to lift more cargoes ahead of looming US sanctions that kick in on Nov. 4.
An unprecedented volume of Iranian crude oil is set to arrive at China’s northeast Dalian port this month and in early November before US sanctions on Iran take effect, according to an Iranian shipping source and data on Refinitiv Eikon.
So far, a total of 22 million barrels of Iranian crude oil loaded on supertankers owned by the National Iranian Tanker Co. are expected to arrive at Dalian in October and November, the data showed. Dalian typically receives between 1 million and 3 million barrels of Iranian oil each month, according to data that dates back to January 2015.