Implications of Oman's budget estimates for 2009
Last week, the Financial Affairs and Energy Resources Council reviewed the state budget estimates for the coming year, which will be unveiled at the beginning of January 2009.
Government ministries will have been working for months on their own budget estimates before figures were presented to this meeting.
On the day that the article was published, the price of Oman 1M oil was trading at around $65 a barrel. Today, the price stands at just over $58 a barrel, up by $4 a barrel from the previous day's closure.
In the face of an obvious global financial downturn, the Council nevertheless chose to set the state budget "on the assumption that oil will be priced at $55 per barrel."
This budget estimate was still more generous than that for the 2008 budget which was set at £45 a barrel. Considerable detail on budgetary figures and expenditure for 2008 is included in that article.
In January this year, a report from Moody's Investors was quoted by Emirates 24/7 as saying that GCC countries, of which Oman is one, could find it hard to curb expenditure growth in the face of rising inflation. For example, Oman hiked the salaries of government employees by 15% in 2007 as inflation began to bite.
Oman's inflation rate has risen by double figures every month this year. Inflation slowed from 14% in June to 13.7% in July but remained unchanged in August.
Perhaps the quoted figure of $55 reflects what is needed to maintain required levels of government spending as well as to sustain the development plans announced at the beginning of the year.
Nevertheless, a breakeven price of $76 a barrel has been quoted for Oman, bearing in mind that economists do differ substantially over actual figures.
Will there be retrenchment, or a standing-still?
"Oman’s actual budget surplus peaked at an all-time high of RO1.567 billion in the first eight months of 2008 compared with a surplus of RO652.4m in the same period of 2007" according to the Times of Oman on 23rd October. With luck, the State Reserve Fund will be able to step in and cover any deficit, should that be required.
I noted this paragraph in the January story, quoting Ahmed bin Abdulnabi Macki, minister of national economy and deputy chairman of the Financial Affairs and Energy Resources Council:
Government ministries will have been working for months on their own budget estimates before figures were presented to this meeting.
On the day that the article was published, the price of Oman 1M oil was trading at around $65 a barrel. Today, the price stands at just over $58 a barrel, up by $4 a barrel from the previous day's closure.
In the face of an obvious global financial downturn, the Council nevertheless chose to set the state budget "on the assumption that oil will be priced at $55 per barrel."
This budget estimate was still more generous than that for the 2008 budget which was set at £45 a barrel. Considerable detail on budgetary figures and expenditure for 2008 is included in that article.
In January this year, a report from Moody's Investors was quoted by Emirates 24/7 as saying that GCC countries, of which Oman is one, could find it hard to curb expenditure growth in the face of rising inflation. For example, Oman hiked the salaries of government employees by 15% in 2007 as inflation began to bite.
Oman's inflation rate has risen by double figures every month this year. Inflation slowed from 14% in June to 13.7% in July but remained unchanged in August.
Perhaps the quoted figure of $55 reflects what is needed to maintain required levels of government spending as well as to sustain the development plans announced at the beginning of the year.
Nevertheless, a breakeven price of $76 a barrel has been quoted for Oman, bearing in mind that economists do differ substantially over actual figures.
Will there be retrenchment, or a standing-still?
"Oman’s actual budget surplus peaked at an all-time high of RO1.567 billion in the first eight months of 2008 compared with a surplus of RO652.4m in the same period of 2007" according to the Times of Oman on 23rd October. With luck, the State Reserve Fund will be able to step in and cover any deficit, should that be required.
I noted this paragraph in the January story, quoting Ahmed bin Abdulnabi Macki, minister of national economy and deputy chairman of the Financial Affairs and Energy Resources Council:
With regard to the tourism sector, upon which the Sultanate very much counts, in view of its several potentials, the preliminary data for 2007 indicate that the sector is expected to grow by a rate exceeding 8 per cent. This is due to the increase in the accommodation capacities and the efforts exerted to promote the tourism in the Sultanate.I wonder what Mr Macki's take is on the cancelled Christmas holidays for the disappointed 'very much counted' Christmas tourists.
Comments
newsbriefs wrote:
11/22/08 16:25:03
The National, published in Abu Dhabi, quotes a figure of $77 from the IMF for Oman to break even. See http://www.thenational.ae/a... dated 22nd November 2008