MUSCAT: Oman’s budget deficit as per cent of gross domestic product (GDP) will remain unchanged at 17.1 per cent this year, despite cut in subsidies and capital investment, a senior official of the International Monetary Fund (IMF) said. This is against 17.6 per cent of GDP last year.
“The authorities have taken bold measures to limit the impact of the fall in oil prices on the fiscal deficit, including cutting spending on wages and benefits, subsidies, defense, and capital investment by civil ministries. These measures are projected to reduce expenditures in 2016 by $4.5 billion (or 8 per cent of GDP); however, these savings will be largely offset by the projected drop in hydrocarbon revenues, resulting in a deficit broadly unchanged at 17.1 per cent of gross domestic product (relative to 17.6 percent of GDP in 2015),” said Allison Holland, who lead an IMF team for a consultation with Omani authorities between April 24 and May 4.
He added that the sustained impact of these measures, combined with the planned increase in corporate income tax from 2017 and the introduction of value added tax (VAT) in 2018, will narrow the fiscal deficit over the medium-term. The current account deficit, estimated at 18.7 percent of GDP in 2015, is also expected to persist, though declining, through the medium-term.
