March 19, 2020 / 1:53 PM / 20 days ago

UPDATE 1-Oman to review budget every three months amid coronavirus fears, low oil prices

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DUBAI, March 19 (Reuters) - Oman will review its budget every three months amid coronavirus concerns, after having cut by 5% the budget allocated to government agencies for 2020, state TV said on Twitter.

The finance ministry cut the budget of civil, military and security agencies for this year by 5%, according to a circular dated March 12 and seen by Reuters earlier this week.

“The financial affairs and energy resources council will follow up on the commitment of government bodies to implement these measures, and on the evaluation of the actual performance of the state’s general budget every 3 months”, state TV said,

The council had its second meeting of the year on Thursday, and discussed “coronavirus and the drop in oil prices, and their significant negative impacts on the financial situation of the state”, state TV reported.

The oil-producing Gulf state’s finances are being strained by the economic impact of the coronavirus outbreak and also by a plunge in oil prices due to a price war between Saudi Arabia and Russia.

Oman has reported 39 cases of coronavirus.

The Omani government said on Thursday it had taken measures to help small businesses in the sultanate, including tourism and municipality tax breaks, free government storage facilities and postponement of credit instalment payments.

Meanwhile, Oman’s central bank is preparing to provide some 8 billion Omani rials ($20 billion) in extra liquidity to banks as part of measures aimed at supporting the economy.

The regulator said this week banks were allowed to lower capital conservation buffers, should accept requests for deferment of loan instalments and increase lending ratios for various economic sectors, including healthcare services.

It also implemented cuts on various interest rates to grant cheaper liquidity to the banking sector.

Oman’s economy, burdened by high levels of debt, is particularly vulnerable to oil price swings. Oman had projected a budget deficit of 2.5 billion rials ($6.50 billion) in 2020, corresponding to a fiscal deficit of 8% of gross domestic product.

Oman got a new ruler, Sultan Haitham bin Tariq al-Said, in January after the death of Sultan Qaboos bin Said, who had ruled the country for half a century. (Reporting by Alaa Swilam, Lisa Barrington, Aziz El Yaakoubi; Writing by Davide Barbuscia; Editing by Alex Richardson and Giles Elgood)

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