MUSCAT, 2 January 2005 — The Sultanate of Oman, confronted with declining oil production, will unveil the 2005 budget today with the projected deficit of 540 million rials, the highest since 1996.
A statement by the state news agency ONA said yesterday the budget, to be announced by National Economy Minister Ahmed bin Abdulnabi Macki, is expected to be based on projected revenues of 3,680 million rials against expenditures of 3,140 million rials.
The new budget, coming in the wake of fall in oil production to around 700,000 barrels a day and the sharp rise in oil prices, was approved by Sultan Qaboos through a royal decree yesterday. The Omani crude was selling for $35.39 per barrel currently.
The last budget, based on $21 per barrel, was marked by a 500 million rials deficit, highest since 1996, with 2925 million rials revenues and 3,425 million rials expenditures.
Economists are keeping their fingers crossed in the face of lingering uncertainties gripping the world, more recently jolted by Asia’s tsunami catastrophe.
“It is going to be a cautious and well-balanced budget,” Palazhi Ashok Kumar, a business analyst, who has been closely following the Gulf’s economy for more than a decade, told Arab News. “The volatility in the oil market and political uncertainty in the region with growing fears of disruption of oil supply by insurgents in Iraq, have largely shaped the 2005 budget, not to mention the considerable fall in oil production.’’
He said the 2002 budget was based on $18 a barrel and the next one on $20 a barrel despite rise in international prices.” This means Oman’s fiscal policy is guided by pragmatism and not speculations.’’ He said he current budget is expected to be based on $23 per barrel.
Arshad Ali Khan, a marketing consultant, said Oman’s economy was in buoyant mood, thanks to the spiral in oil prices and the realization of the projections in the last budget beyond expectations.” Oman is in for a brighter economy in 2005.’’
He said the fact that Central Bank of Oman yesterday lowered the interest rate by one percent to nine percent on personal loans showed the country’s growing liquidity and financial solidity.” It was a befitting New Year gift for the growing business community.’’
