Region Oman will base its 2010 budget on a projected average oil price of $50 a barrel, the national economy ministry said on Sunday.
Oman sets budget on $50 oil
MUSCAT // Oman will base its 2010 budget on a projected average oil price of $50 a barrel, the national economy ministry said on Sunday, sparking calls for the government to take a less conservative approach given the downturn. The $50 projection, which the Ministry of National Economy made on its website, is just $5 above the average price Oman set its 2009 budget forecast on. The ministry did not provide spending or revenue forecasts for the year.
Crude, which slumped to a low around $32 in December from records at $147 in July last year, stood at $72.20 this week. The conservative budget estimate prompted concern among some analysts who say the Gulf state is taking too cautious an approach against the backdrop of global financial uncertainty. "I see limited spending in 2010 and that does not inspire investors' confidence," Mubarak Al Arami, managing director of Kanz Investment Holdings.
"We need to see the government propping up its budget, much higher than in 2009, in this uncertain global climate." The International Monetary Fund on Sunday called on Gulf states to continue public spending next year, saying the counter-cyclical spending by oil exporters in the face of the downturn had helped limit its impact on their economies. Oman, a non-OPEC oil producer, forecast a budget deficit of 810 million rials (Dh7.7bn) in 2009 and expenditure of 6.424 billion rials. The 2009 revenue estimate of 5.614 billion rials, based on an average oil price of $45 per barrel, was 3.96 per cent higher than in 2008.
The country's oil minister has previously said that oil production will rise to an average of 800,000 barrels per day in 2009. "It clearly indicates another deficit, probably 10 per cent more than in 2009 and that will not go well with investors, both local and international," Mohammed Al Kaabi, head of investments at Capital Properties, said. *Reuters