Muscat: The national economy is set to post a seven per cent growth in the State Budget 2013, while government expenditure is likely to touch 13 billion Omani riyals, according to Darwish Bin Esmaeel Al Balushi, Minister Responsible for Financial Affairs.

Speaking at a Majlis Ashura session on Sunday, Al Balushi reviewed the salient features of the budget, both on the social and economic fronts.

The minister affirmed that the financial allocation for government ministries and units’ development programme have been raised by about 30 per cent to complete infrastructure projects under way, like ports, airports, roads, water, sewerage networks and projects at Al Duqm Special Economic Zone and other areas.

This allocation will provide an investor-friendly climate which will encourage local and foreign private investments, said Al Balushi, who welcomed more private sector partnership to promote diversification of sources of income and the employment of citizens.

Al Balushi also pointed out that efforts to enhance the production capacity of oil and gas sector are progressing well through increased spending on exploration programmes and production and modern enhanced oil recovery. He pointed out that the growth rate of expenditure in this sector currently stands at about 14 per cent.

The minister explained that the cautious approach adopted while preparing the annual budget was aimed at achieving more realistic visions. He noted that this approach proved to be sound during the past two years and helped make the Omani economy immune from the negative effects of foreign shocks and sharp fluctuation of oil prices in the world markets.

The statement, reported by government-owned Oman News Agency (ONA), focused on estimates of the state’s draft budget 2013, as was the case with the previous budget, aims at achieving a number of aims and priorities. The main objective of the Eighth Five Year Plan is to strike a balance between economic and social development.

While developing the assumptions of the financial estimates for the different expenditure items, various types of socioeconomic developments were taken into consideration, as well as the outcomes of implementation of the first two years of the plan 2011 and 2012.

Al Balushi said that, while the volume of growth of expenditure cited in the budget is high and unprecedented (29 per cent higher), still the expenditure will be hopefully financed from real resources without the need to borrow or withdraw from funds in an unplanned manner — if the oil prices went down severely.

The minister further informed that the financial framework for the draft General Budget of the State for 2013 is estimated as follows:

The public revenues were estimated at 11.2 billion riyals, with a growth of 27 per cent, representing oil and gas revenues 84 per cent of the total revenues and non-oil revenues 16 per cent. He explained that the oil price has been calculated at $85 per barrel and the average daily production at 930,000bpd.

As for the general expenditure, he said that it is expected to be 12.9 billion riyals, a growth rate of 29 per cent compared to the approved expenditure at the beginning of the year and 12 per cent compared to the amended expenditure.

As for the estimated deficit between revenues and public expenditure, he further said that it will be about 1.7 billion riyals or 15 per cent of the revenues and five per cent of the GDP.

He pointed out that the deficit is expected to be covered from the financial revenues from oil prices being higher than the estimated price in the budget.

“Oil is still the main source for financing public expenditure due to the high price for the required equilibrium for covering the budget $104 for oil. It is important to affirm the need to abide by the expenditure estimates and not to exceed it except in cases of emergency and dire needs,” he added.