The Gulf state of Oman adopted on Monday its 2018 budget projecting a deficit of $7.8 billion due to low oil prices, but said the shortfall is declining.
Like other energy-rich Gulf states, Oman was hit hard by the slump in oil prices since mid-2014 and joined an agreement by oil producers to cut production in a bid to shore up prices.
Revenues in 2018 are estimated at $24.7 billion, up just three percent on last year, with spending projected at $32.5 billion, seven percent higher, according to a statement by the finance ministry.
Despite measures to reduce dependence on oil, income from crude is estimated to account for 70 percent of total revenues, the ministry said.
In 2017, the ministry said the country posted a higher-than-expected deficit at $9.1 billion due to cuts in oil production in line with an agreement by OPEC and non-OPEC members.
The ministry said the budget shortfalls have been on the decline due to raising non-oil revenues and higher oil income.
To finance the budget deficit, Oman last year raised $11.2 billion in debt in the form of bonds, Islamic sukuk and loans. It plans to raise $6.5 billion this year, the ministry said.
About one-third of the budget spending this year has been earmarked for social services, education and health, the statement said.
Like other Gulf states, Oman has introduced a series of austerity measures and subsidy cuts to boost non-oil revenues.
But it has delayed the implementation of a five-percent value-added tax which Gulf peers Saudi Arabia and United Arab Emirates introduced on Monday.
Oman is a member of the six-nation Gulf Cooperation Council along with Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates, but is not a member of the oil-producing OPEC cartel.
