Stock Oman Muscat skyline
Oman has prepared its 2021 budget with oil prices at $45 a barrel. The government has plans to curb all non-essential spending to keep its deficit in check. Image Credit: Shutterstock

Muscat: Oman's government will finance most of its 2021 budget shortfall by borrowing to plug a fiscal gap battered by a decline in oil prices and the coronavirus pandemic.

The Gulf state is looking into borrowing that will cover 73 per cent, or 1.6 billion rials, of the country's 2.2 billion rial ($5.7 billion) shortfall, with the remaining 600 million rials to be drawn from its reserves, according to a post on Twitter by state-run Oman News Agency on Friday. The government based its 2021 budget plan on an oil price of $45 per barrel.

Other highlights from the 2021 budget:

Oman has taken measures such as reducing spending and plans to impose a 5 per cent value-added tax in 2021. It plans to implement developmental projects valued at 371 million rials as part of the effort to redirect resources toward "national priorities", according to Oman News Agency.

Oman has been hammered by the coronavirus pandemic as well as lower crude prices and has raised the possibility of assistance from its Gulf neighbors.