The spending on investment projects, particularly job creation projects that have economic returns, is expected to reach OMR5.3 billion, out of which OMR2.7 billion will be paid by state-owned enterprises (SOEs) for service and industrial projects, according to the Ministry of Finance Budget document.
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Also an amount of OMR1.3 billion will be spent by various government organisations on infrastructure projects. In addition, an amount of OMR1.3 billion will be allocated for oil and gas production. These projects will eventually help in generating more job opportunities.
Housing loans provided by the Oman Housing Bank (OHB) is set to increase to 1,587 by the end of 2020, with a total amount of OMR80 million as compared with loans amounting to OMR60 million given to 1,375 entities.
Oil revenue has been projected to reach OMR5.5 billion, representing 51 per cent of total revenue as against 54 per cent in 2019, while estimated gas revenue in 2020 Budget increased by 11 per cent compared to budgeted figures of 2019, reaching OMR2.2 billion. This is attributed to an increase in natural gas volume by 5 per cent, and a rise in local gas sales by 3 per cent, the Ministry said.
The non-hydrocarbon revenue projected to stand at OMR3 billion, up by 13 per cent as compared with 2019 Budget. This increase is due to higher tax revenue by 9 per cent and non-tax revenue by 18 per cent as compared with what has been achieved in 2019.
This comes in line with government’s efforts to diversify the sources of income and enhance non-hydrocarbon revenue.
The recent establishment of Tax Authority will help to improve the efficiency of tax collection.
According to the preliminary results, the actual fiscal deficit for FY 2020 is projected to be around OMR2.5 billion, 8 per cent of the GDP, lower than 2019 budgeted deficit.
The deficit is trending downward from its level over the past three years. Any resultant increase in oil revenue will be utilised in financing the deficit.
The deficit will be financed through external and domestic borrowing by 80 per cent (OMR2 billion).
The remaining deficit, estimated to nearly OMR500 million, will be covered by drawing on reserves.
The 2020 Budget represents the final year of the Ninth Five-Year Development Plan (2016-2020), and also reflects the last year of Oman Vision 2020. Therefore, the Budget complements previous budgets and paves the way for Oman Vision 2040 and the Tenth Five-Year Development Plan (2021-2025).
A number of factors adversely affect global economic growth prospects, and thus lead to growing risks over global financial stability, interest rates and financial markets. The International Monetary Fund (IMF) has, therefore, recently revised for the third time its global growth forecast downward in 2019, from 3.3 per cent to 3 per cent. However, according to IMF World Economic Outlook (October, 2019), the global economic performance is expected to recover to 3.4 per cent in 2020.
Various international institutions projections on global economic growth in 2020 ranged between 2.8 per cent and 3.4 per cent.
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