Muscat: The government expenditure and revenue are estimated at OMR13.5 billion and OMR11.7 billion, respectively, leaving an anticipated deficit of OMR1.8 billion for 2014.
The estimated public expenditure for the current year is up by five per cent over last year's budget proposal, while total revenue is projected to grow by 4.5 per cent compared to last year's revenue estimate, said Darwish bin Ismail Ali Al Balushi, minister responsible for financial affairs.
The deficit, calculated on the basis of an assumed oil price of $85 per barrel, is estimated at OMR1.8 billion, forming 15 per cent of revenue and 6 per cent of the gross domestic product (GDP). The deficit will be covered by way net foreign borrowing to the tune of OMR200 million, net domestic borrowing of OMR200 million, OMR1 billion surplus from 2012 and OMR400 million from general reserves.
The minister noted that the recent standardisation of grades in different ministries would incur an additional cost of OMR800-900 million for the government, which is not included in the budget estimate. The Ministry of Finance is yet to calculate the amount and once that is complete, it will be included in the budget.
Al Balushi said the current expenditure of OMR8.7 billion represents 65 per cent of total public expenditure, while salaries and wages at OMR5 billion constitutes 37 per cent of total public spending.
The minister also noted that the investment expenditure is estimated at OMR3.2 billion, which is 24 per cent of the overall public expenditure and is mainly for covering expenditure on development projects and capital expenditure for developing oil and gas fields.
The minister said oil revenue represents 83 per cent of total revenue, while non-oil revenue forms the remaining 17 per cent of which almost 50 per cent is from tax revenue and fees.
The rise in global demand for oil and reduced supplies played a role in supporting oil prices in 2013 where the average price of Omani oil was about $106 per barrel. "Global indicators also suggest that oil prices will preserve their current levels in 2014," he noted.
The minister also said that the state budget includes allocations of OMR9.2 billion to meet social sectors such as education, health, housing, training, subsidy and other social services. This is against OMR8.7 billion in last year's budget, a growth of OMR465 million or 5.3 per cent.
Giving a break-up of different social sectors, he said the education sector, with an estimated expenditure of OMR2.6 billion, constitutes 18.6 per cent of the total public expenditure, training programmes need OMR95 million, health sector expenditure amounts to OMR 1.3 billion and social security and welfare will have another OMR 133 million to cover pensions and social welfare. The housing sector, with an expenditure of OMR2.8 billion, is another major allocation.
Subsidies and exemptions constitute OMR1.6 billion, which include subsidies for interests on housing loans, electricity, water, fuel and some basic food items.
Eight plan allocation surges
Total allocation for civil ministries development and investment programme by the end of 2013 surged ahead to OMR17 billion, from an initial allocation of OMR12 billion, registering an increase of OMR5 billion or 41 per cent. This growth was due to additional projects introduced across all sectors as well as the enhanced allocations for some projects.
The investment projects which the government will directly or through government-owned companies execute in 2014 provide opportunities to stimulate private sector activities in the Sultanate, as well as to generate a lot of employment opportunities. Some of the important projects include the refinery and petrochemical project at Duqm Economic Zone, Sohar refinery expansion project, a factory for assembling and manufacturing bus in the Sultanate in cooperation with Qatari Transportation Company, completion of Oman exhibition centre and several tourism projects.
Railway first phase to cost OMR1bn
He also noted that the first phase of the national railway project is estimated to cost OMR1 billion.
Also, road projects, at a cost of OMR807 million, include dualisation of Bidbid-Sur road, Barka-Nakhal road, the construction of Diba-Lima-Khasab as well as the first phase of the dualisation of Adam Thamrait road. Health sector projects, with a cost amounting to OMR384 million is another major investment.