Oman plans to raise spending by 11 percent in its 2011 budget to push ahead with infrastructure and development projects, a finance ministry official said on Monday, but oil revenue is also expected to rise strongly.
The non OPEC oil producer's spending was set at 7.2 billion rials ($18.7 billion) for 2010, but Oman overshot its original spending plans in the past two years to help its economy ride out the global financial downturn.
Speaking to Reuters, the finance ministry offical, who declined to be identified, said: "We would like to see the 2011 spending at around $20.7 billion in consistence with growth for our development projects."
He also said the government was considering basing its 2011 budget on an average oil price of $55 per barrel.
Oman based the 2010 budget on a $50 per barrel price but sold its oil at an average of $77.57 a barrel in the first half of the year. Its budget surplus widened to $1.82 billion at the end of June, data showed in August.
While declining to give an exact figure, the finance ministry official said: "We will still have a deficit for the 2011 budget but in consistence with growth."
The Gulf Arab state forecast a budget deficit of $2.07 billion this year, but analysts expected the shortfall to be comfortably wiped out.
Anees al Kharusi, financial analyst, Capital Investments, Muscat, said: "At the end of 2010, the average oil price will be in the range of about $70 per barrel, and that is enough to settle the deficit and even to record a small surplus."
The sultanate said in March it expected gross domestic product (GDP) to jump 6.1 percent in 2010, helped by a recovery in oil prices, but a source said GDP was now likely to grow 5 percent this year.
Crude oil production provides more than 70 percent of Oman's income. Crude exports accounted for more than 67 percent of Oman's overall exports in April.
Benchmark US crude oil prices were steady on Monday, trading close to a two week high near $77, as energy and commodities regained investor favour due to a weaker dollar and resurfacing risk appetite.
In 2009 Oman spent about $16 billion on local infrastructure and other projects, and this year the government has already signed contracts worth $11.5 billion out of the $18.7 billion spending budget, according to national economy ministry statistics.
Oman is building three new airports and plans to upgrade its main airports in Muscat and Salalah, its second largest city.
It is also increasing power generation capacity by about 7 percent per year to meet rising demand.
In April, the foreign trade surplus surged to a two year high of $1.6 billion, with higher hydrocarbon exports pushing overall exports up 72 percent from a year earlier.
Analysts polled by Reuters forecast inflation will average 3.5 percent this year and Oman will post a current account surplus of 3.0 percent of GDP. (Reuters)For all the latest Oman news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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