Oman mulls spending cuts

25/11/2014 06:24 AST

Oman's government has suggested sweeping spending cuts and tax rises, including a levy on liquefied natural gas exports, to cope with the hit to state revenues from the plunge in oil prices.

Oman has run a small budget surplus so far this year but the slide of the Brent crude oil price to around $80 a barrel in recent months, from levels of around $115 in June, promises to push it into deficit next year unless oil rebounds sharply.

Assuming an average oil price of $80 next year and no additional steps to boost revenue, the government is likely to post a deficit of 3.05 billion rials ($7.9bn), state news agency ONA reported yesterday.

The Shura Council therefore suggested reforms to expand Oman's non-oil tax revenues, including an expansion of tax categories, a review of tax rates, the addition of new tax sources and improvements to the efficiency of tax collection.

A 12 per cent royalty would be levied on the revenues of telecommunications operators; this would add about 31m rials from Oman Telecommunications and the local operations of Qatar's Ooredoo, ONA said.

The council's economic and financial committee also recommended imposing a 2pc tax on the remittances back to their home countries of the more than 1m foreign workers in Oman.

This would generate about 62m rials.


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