By Conrad Prabhu
Muscat, September 30, 2020
The Sultanate of Oman’s official revenues slumped 12.4 per cent to RO 4.830 billion during the first six months of 2020, resulting in a deficit of RO 827 million for the period, the National Centre for Statistics and Information (NCSI) reveals in its latest monthly bulletin.
Contributing to the decline were lower oil and gas export revenues, as well as significant shortfalls in customs duties and corporate income tax, according to the report. Net oil revenue fell 16.3 per cent to RO 2.572 billion during the six months to June 30, 2020, down from RO 3.074 billion during the same period of 2019.
The disparity is primarily attributable to the downtrend in international oil prices witnessed over the course of this year, combined with an output cut agreed by Oman in line with its commitment to the Opec+ grouping to help shore up global oil prices.
LNG export revenues too fell 21.2 per cent to RO 740 million this year, down from RO 934 million last year.
Citing Ministry of Finance data, the bulletin also noted a steep 33 per cent drop in corporate income tax, which tumbled to RO 351 million this year, down from RO 524 million during the first half of 2019.
An assortment of ‘Other Revenues’ registered a 26.4 per cent uptick to RO 1.066 billion, up from RO 843 million last year.
In line with a series of belt-tightening measures adopted by the government to help rein in the country’s burgeoning fiscal deficit, total public expenditure too declined 8.9 per cent to RO 5.656 billion as of end-June 2020 versus, RO 6.174 billion for the corresponding period of 2019.
This includes a 25.6 per cent reduction in Investment Expenditure which fell to RO 817 million this year, down from RO 1.098 billion last year.
Interest on loans surged 47 per cent to RO 410 million this year, up from RO 279 million during the first half of 2019.
The deficit accrued over the first half was financed largely through a combination of withdrawals from reserves (RO 500 million) and local loans (RO 270 million).
Keeping pace with these declining trends, the contribution of various economic sectors to the country’s Gross Domestic Product (GDP) also fell proportionately during the first half of this year, the NCSI report said.
The share of the Oil & Gas sector at current prices slumped 20 per cent to RO 4.085 billion this year, down from RO 5.103 billion for the first half of 2019. Non-oil activities too registered a 10 per cent decline to RO 8.701 billion this year, versus RO 9.660 billion last year.
With the sole exception of the Agriculture & Fisheries sector, almost every other economic sector witnessed a decline in its contribution to the GDP — a reflection of the substantive impact that the economic downturn, combined with the coronavirus pandemic, has had on the domestic economy.
The Hotels & Restaurants sector, which was among the worst hit, saw its share plummet 34.3 per cent to RO 104.5 million during the January-June 2020 period, down from RO 159 million last year.
The Services sector — one of the key pillars of the non-oil economy — shrank 10.6 per cent to RO 6.094 billion this year compared to RO 6.817 billion last year. Real estate services too fell 23 per cent to RO 515 million, from RO 669 million in 2019.
Other sectors that contracted in terms of their contribution to the GDP (at current prices) were: Industry RO 2.217 billion (-11.3 per cent), Manufacturing RO 1.098 billion (-9.5 per cent), Financial Intermediation RO 993 million (-5.6 per cent), Transport, Storage & Communication RO 700 million (-13.5 per cent), and Construction RO 768 million (-16.8 per cent). The sole bright spot was Agriculture, Fisheries which climbed 13.2 per cent to RO 390 million.