The Institute of International Finance expected an increase in the dues of the external debt owed by the Sultanate of Oman and the public budget deficit to 8 billion dollars during 2021, due to the financial weakness caused by the drop in oil prices from the outbreak of the Corona pandemic.
According to the institute, the sharp decline in Oman's oil revenues will exceed the decline in public spending, leading to a large fiscal deficit, despite the Sultanate of Oman's response to the challenges posed by the pandemic, through the implementation of strong fiscal adjustment and other reforms.
The institute expected that the debt issues will provide for the financing needs of the Sultanate during the five years between 2021-2025. Indicating the good progress in adjusting public finances and implementing structural reform, as well as reorganizing and merging many ministries, with the aim of simplifying government operations and reducing spending.
Other new measures include a 10% reduction in spending on wages, as well as the imposition of a value-added tax of 5%, and an income tax in early 2021. The expected new tax revenues will represent 2% of the Sultanate's non-oil GDP.
The report showed that the Sultanate of Oman spends much more on public sector wages, defense and capital expenditures, compared to other Gulf countries, with a rate of 43% as a percentage of GDP. The institute expected public debt levels to rise from 75.5% as a percentage of GDP to 80.4% by the end of 2021. The Sultanate’s public finances were affected by the double whammy of the new Corona outbreak and low oil prices, even though it is a small oil producer with a production volume not exceeding one million barrels per day.
Source (Al-Araby Al-Jadeed Newspaper, Edited)
