Oman deficit at $2.3 bln in May as oil revenue declines

Oman has reined in public spending to reduce its fiscal shortfall. (Reuters)

• Oil revenues in the first five months of 2021 declined by 23 percent
• Public spending was down 2.9 percent annually in the year until May

MUSCAT: Oman posted a year-to-date budget deficit of 890.2 million rials ($2.32 billion) in May, the ministry of finance said on Thursday, as low oil prices and lower crude output weigh on the finances of the small Gulf producer.
Oman is among the weakest countries financially in the oil-rich region and more vulnerable to swings in the price of hydrocarbons, a sector that accounted for about a third of its gross domestic product (GDP) in 2019.
Oil revenues in the first five months of this year declined by 23 percent when compared to the same period in 2020, the ministry said. Total revenue, including non-oil, was down 19 percent.
Oman has reined in public spending to reduce its fiscal shortfall but the rate of adjustment lags the revenue drop.
“Public spending continues to decline as fiscal consolidation continues,” the ministry said.
Expenditure was down 2.9 percent annually in the year till May.
GDP at current prices was down by 2.5 percent in the first quarter, pressured by a 20.6 percent decline in oil activities, while the non-oil sector was up by 5.7 percent, the ministry said.
Oman introduced a medium-term fiscal plan in October last year which reassured investors and helped the sultanate to raise billions of dollars in loans and bonds this year.
Last month it raised $1.75 billion in sukuk, or Islamic bonds, drawing over $11.5 billion in demand.