Dubai: Oman will cut the budgets of government bodies and the armed forces by a further 5% this year, as part of measures to offset the impact of falls in oil prices, the state news agency cited a finance ministry statement as saying on Wednesday.
The budgets had already been cut by 5% in mid-April in response to the coronavirus outbreak.
Oman’s fiscal deficits and maturing external and domestic debt will average slightly more than $12 billion annually over the next four years, or 17 per cent of annual GDP, according to forecasts. Its estimated fiscal breakeven oil price is close to $90/bbl - the second highest in the GCC after Bahrain.
Owing to a sharp drop in oil prices and production cuts under the recent OPEC+ agreement, rating agency Standard & Poor's expects Oman’s fiscal deficit (excluding investment income on sovereign wealth fund assets) will rise to 17.5 per cent of GDP ($11 billion) from 9.7 per cent in 2019.
This year, funding to meet its fiscal deficit of $11 billion and maturing debt of almost $3 billion could come mainly from external debt issuance of $6 billion, including syndicated loans from banks, bonds, sukuk, and some committed concessional loans from official lenders.