Oman’s Central Bank announced that Oman booked a budget deficit of RO22.1 million last year, a fraction of the Gulf oil producer's initial plan, helped by recovery in oil prices.
Oman originally planned a budget shortfall of RO810m in 2009 based on an oil price of $45 a barrel and following a surplus of 1.6 billion in the previous year. Revenues dropped 16.3 percent to 6.687 billion last year, but were higher than RO 5.614 billion projected, as oil prices recovered following a sharp fall from a 2008 record peak of over $147 a barrel, the data showed.
Oman’s expenditures rose 4.8 percent to RO6.709 billion in 2009 from the previous year, above RO6.424bn planned, on higher infrastructure spending.
Year on year oil production increased by nine percent in the third quarter of 2009, while output throughout the year until September grew by nearly 7.1 per cent compared with the same period of 2008. Oman has been locked in a drive to restore oil production to its level 10 years ago, when it was higher than 800,000 barrels per day. Official figures showed output grew by around seven percent to an average 810,000bpd in 2009 from just over 750,000bpd in 2008.
Oman sold its oil at an average price of $56.67 a barrel in 2009, down 44 percent from a year earlier.
However, Oman’s GDP dropped by over 20 percent in 2009, from RO23.2 billion in 2008 to RO18.5bn in 2009, according to data released by the Ministry of National Economy.
Growth recorded in 2009 was 3.7 percent, higher than the IMF’s forecast of 3 percent.
Oman, which boosted spending by 12 percent this year to finance a range of infrastructure projects, is expected to book a fiscal surplus of 4.0 percent of gross domestic product this year.
March 1-7, 2010
Analysis and Forecast: Decreasing Risk
The data issued by the Omani Central Bank and Ministry of National Economy both indicate that Oman has fared much better than other GCC states, with the exception of Qatar.
Oman has largely been helped by its ability to increase its oil production. This is because Oman is not an OPEC member and therefore not obliged to follow its output cuts. In fact, OPEC cuts have helped Oman as oil prices went up while its output also went up.
The figures released indicate that Oman has suffered less in the crisis than its neighbours the UAE and Saudi Arabia. However, the country still heavily relies on oil revenue and fluctuations in oil prices heavily impact on the countries finances. The latest numbers indicate that Oman will be able to comfortably continue with its diversification plans, which were less interrupted than original predictions. This therefore presents a temporary respite and as longer-term plans are implemented.
The figure below shows the current make-up of the GDP. Oman plans to reduce the contribution of oil to 9 percent and increase the contribution of gas to 10 percent of GDP, by 2020.