Oman surplus widens to $4.2bn

Oman’s budget surplus rose to 1.6bn rials ($4.2bn) in the first five months of this year as oil revenue soared, while inflation slowed sharply, data showed yesterday. The budget surplus is equivalent to about 5.7% 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% to 10bn rials this year compared to its original projection for 2011. In January-May, the Gulf Arab sultanate’s revenue jumped 34% year-on-year to 6.1bn rials, or 69% of the initial full-year projection, the data showed. In May, large-scale strikes hit oil facilities in Oman, which flanks a key oil shipping lane. But the data showed output increased to 25.3mn barrels from 23.6mn in April. Spending was up 38% from a year earlier at 4.5bn rials in the first five months of the year. Higher oil prices helped public finances improve significantly compared to a year ago when the government posted a mere 184mn-rial surplus for January-May. A Reuters poll this week forecast the non-Opec oil producer would post a fiscal surplus of 6.5% of GDP in 2012, up from a forecast of 5.0% by analysts in March, and rising from 3.5% last year. Prices of crude, which accounts for 77% of Oman’s income, fell $40 to as low as $88 per barrel for Brent between March and June but have since stabilised at above $98.. Oman sold its crude at an average $113.5 per barrel in January-May, up 20% from a year ago. As a result, net oil revenue jumped 33% to 4.5bn rials. The sultanate would still post a surplus in 2012 if oil prices stay at current levels, as the poll forecast Oman’s budget break-even oil price at $83 per barrel. But that level is expected to rise to $105 by 2016, the IMF said in December. The central bank has said it and the government have scope to keep pursuing expansionary policies without threatening economic stability, adding the budget may turn out to be in surplus in 2012 given still-robust oil prices. Sultan Qaboos bin Said last year pledged an extra $2.6bn of spending in April 2011. Oman, which obtained pledges in March 2011 for $10bn in aid over 10 years from its Gulf neighbours, forecasts a budget deficit of 1.2bn rials for 2012, or 4.3% of 2011 GDP. The projected oil price is $75 per barrel. The data also showed that annual consumer price growth in Oman slowed sharply to 2.2% in May, the lowest level since February 2010, from 3.0% in April. from gulf times.