A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd.
VOL 15, Issue 02 April 2013
Oman Budget 2013
The 2013 Budget is a positive, growth-oriented budget that has exceeded market expectations, and is expected to infuse new vigor into the core sectors of the economy through increased allocations to development of vital infrastructure projects that are critical for the development of the nation.
The budget estimates a substantial 27% increase in total revenues to OMR 11.2 billion, based on oil prices estimated at US $ 85 per barrel. Nearly 84% of the revenue will come from the oil and gas sector while the non-oil sectors will contribute the balance 16%. The economic activity in Oman is being fuelled by the robust outlook for oil. Oil production is expected to average 930,000 barrels per day in 2013, with revenues from the oil sector estimated at OMR 8 billion, i.e. 32% over the 2012 estimates.
The total public expenditure estimate has increased by a substantial 29% to OMR 12.9 billion, whereas in 2012 only a 9% increase was envisaged. The total current expenditure, estimated at about OMR 8.1 billion, will account for 63% of the total public expenditure whereas the investment expenditure is estimated to substantially increase by 15% to OMR 3.1 billion. Major allocations have been made in the Budget for roads, airports and ports, and the waste water and tourism sectors.
The priorities are for speeding up development of Duqm Special Economic Zone, the Ibri and Sur Dam projects, waste water projects in Muscat and Salalah, the Sohar Airport project, various road projects, and construction of health centres and schools across various Wilayats, all of which present excellent opportunities for contracting and engineering companies. Besides creating new jobs for young Omanis, the budget also has made allocations for imparting vocational and on-the-job training to them. The promotion of in-country value in the oil and gas industry will also provide more opportunities for local businesses and SMEs.
The Oman economy is expected to grow 7% in 2013, and about 56,000 new jobs are expected to be created. Whilst the budget envisages a deficit of OMR 1.7 billion for 2013, the surplus of OMR 1 billion achieved last year would be used to fund a part of the shortfall. Inflation is expected to remain stable at around 3%. Despite challenges faced by the government in controlling inflation and maintaining high growth rates, Oman continues to power ahead with a balanced development approach.
(This article is compiled by Mr. Zarir Patwa, a Partner in PKF L.L.C., Muscat, the PKF member firm in the Sultanate of Oman.)