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Oman posts $3.8bn surplus in 4 months

Muscat, June 20, 2012

Oman posted a budget surplus of 1.5 billion rials ($3.8 billion) in the first four months of this year helped by surging oil revenues, while inflation dipped to a two-year low of 3 percent in April, economy ministry data showed on Wednesday.

The budget surplus is equivalent to about 5.3 percent of the sultanate's 2011 nominal gross domestic product, according to a Reuters calculation.

Oman, which faces a challenge to create tens of thousands of jobs every year for its fast-growing population, has raised its budget by 23 percent to 10 billion rials this year compared to its original projection for 2011.

In January-April, the sultanate's revenue jumped by nearly 40 percent year-on-year to 4.6 billion rials, or 52 percent of the initial full-year projection, the data showed.

Spending increased by 26 percent from a year earlier.

Public finances have improved markedly compared to a year ago when the government posted a 114 million rial deficit for January-April.

Analysts polled by Reuters in March expected the non-Opec oil producer to post a fiscal surplus of 5.0 percent of GDP in 2012, up from 3.5 percent last year.

However, prices of crude oil, which accounts for 76 percent of Oman's budget income, have plunged by more than $30 since the end of March to around $95 per barrel.

The country would still post a surplus in 2012 if oil prices stay at current levels, as the International Monetary Fund projected in December that Oman's budget break-even oil price would be $81. But that break-even level is expected to rise to $105 by 2016.

The country of 2.8 million people boosted spending last year following protests demanding more jobs and an end to corruption. Large scale strikes in Oman's oil facilities in May were followed by political protests and the detention of about 30 people, including activists whose arrest sparked more protest.

Net oil revenues surged 35 percent in January-April from a year earlier to 3.3 billion rials, Wednesday's data showed. Oman sold its oil at an average price of $109.1 per barrel, up from $88.4 in the first three months of 2011.

Government spending soared 26 percent to 3.1 billion rials in January-April, accounting for a third of the full-year plan.

Social unrest last year prompted Sultan Qaboos bin Said, a US ally who has ruled Oman for 42 years, to pledge an extra $2.6 billion of spending in April 2011.

Oman, which obtained pledges in March 2011 for $10 billion in aid over 10 years from its wealthier Gulf neighbours, forecasts a budget deficit of 1.2 billion rials for 2012, or 4.3 percent of 2011 GDP. The projected oil price is $75 per barrel.

A prospectus for Bahrain's upcoming sovereign bond showed earlier on Wednesday that the Gulf $20 billion development fund, whose aid should be equally shared by Oman and Bahrain has yet to be capitalised.

The ministry's data also showed that annual consumer price growth in Oman slowed slightly to a 25-month low of 3.0 percent in April from 3.1 percent in March.

On the month, prices in the country, which pegs its rial to the US dollar, rose 0.1 percent mainly driven by an increase in transport costs, after a 0.3 percent fall in March.

The Reuters poll in March forecast average inflation in Oman at 3.5 percent in 2012, down from a three-year high of 4.0 percent in 2011.  - Reuters

Tags: Oman | Budget | surplus |

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