​OMAN: Budget discloses detailed projections until 2025 but takes oil spending off-budget

GULF COUNTRIES - Report 08 Jan 2021 by Justin Alexander

* The new fiscal projections until 2025 seem to be derived from the existing Tawazun plan.
* However, oil expenditure has been taken off-budget and some other minor changes were made.
* More detailed disclosures show the budgeted path for subsidy reform and non-oil revenue growth.
* The oil assumptions, including a price of $50 in 2025, are relatively conservative.
* The 2021 budget itself includes a -6% cut in civil ministry spending and -5% on defense, relative to the revised 2020 budget.
* We still don’t have any fiscal outturn data past August (published back in October).

Among the key takeaways:
• Tax & fee revenue jumps sharply in 2021, largely due to the introduction of VAT and taxes delayed from 2020, and then grows steadily. The jump in 2023 may suggest that personal income tax, the other new revenue-raising policy that has been mooted, is not expected to come into force until late 2022. Confusingly, this line appears to include many of the items previously categorized as non-tax revenue, including income from the Oman Investment Authority (OIA).
• Little capital revenue from privatizations is budgeted, although the proceeds from such sales could be used off-budget by OIA.
• After consolidation this year, the plan is to hold the core components of expenditure (civil ministries, defense and civil development) largely flat. This will be hardest to achieve for civil ministries.
• Electricity subsidies are expected to fall by a half by 2023 and three quarters by 2025. This is broadly in line with the recently announced schedule of tariff increases.
• Other subsidies are seen rebounding partially in 2021 and then declining steadily, halving by 2025. This is plausible, although only a plan for water, about a third of the total in the 2021 budget, has been announced so far. The other major subsidies areas are sewage and waste.
• The interest bill continues to grow, nearly doubling by 2025 to about 15% of total expenditure.

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