(Adds details of revenue measures, debt, context)
By Fatma Alarimi
MUSCAT Jan 1 Oman's government released a 2017
budget plan on Sunday that projected a smaller deficit but
included fresh austerity steps and tight curbs on spending
because of low oil prices, which are hurting state revenues.
Government spending this year is projected to total 11.7
billion rials ($30.4 billion) and revenues 8.7 billion rials,
which would result in a deficit of 3 billion rials.
That compares with the government's original 2016 budget
plan of 11.9 billion rials in spending, 8.6 billion rials in
revenues and a 3.3 billion rial deficit.
The finance ministry said the government planned a string of
steps this year to boost non-oil revenues, including changes to
income tax, new taxation of goods such as tobacco and alcohol,
and changes to fees charged for hiring foreign workers.
Tax exemptions for companies will be cut, electricity
tariffs raised for large corporate and government consumers, and
fees amended for some services provided by ministries and
Shares in two telecommunications firms, Oman
Telecommunications and Ooredoo Oman, fell
sharply on Sunday after they said the royalty which they paid to
the government had been raised to 12 percent from 7 percent.
"Due to the financial pressure on the state budget caused by
public salaries, openings for new jobs in the public sector will
be limited. It will be up to the private sector to create jobs
and employ job seekers," the ministry said.
Oman lacks the ample oil and fiscal reserves of its wealthy
neighbours and its finances have been hit hard by the plunge of
oil prices since 2014. In 2015, its deficit was worth 16.5
percent of gross domestic product, according to the
International Monetary Fund.
The 2017 budget assumes an average oil price of $45 a
barrel. The ministry said it would cover the deficit this year
with 2.1 billion rials of international borrowing, 400 million
rials of domestic borrowing and the drawdown of 500 million
rials from financial reserves.
Oman has said it plans to sell stakes in a string of state
companies over the next several years. Procedures to sell shares
in the first of these, Muscat Electricity Distribution Co, will
be completed in the first half of 2017, the ministry said.
The 2016 budget was also based on an oil price assumption of
$45 a barrel but, partly because oil actually averaged $39 last
year, the deficit came in much higher than expected at about 5.3
(Writing by Andrew Torchia; Editing by Adrian Croft)