Oman Studying Ways To Limit Spending After Oil Price Plunge

Oman’s government is studying ways to limit spending in the wake of the plunge of oil prices, but it does not intend to cut back infrastructure projects, a senior finance ministry official said on Tuesday.

Among the wealthy Gulf oil exporters, Oman needs a relatively high oil price to balance its budget, so its state finances are more vulnerable than most to the drop of Brent crude oil to around $85 a barrel.

The International Monetary Fund estimated earlier this year that Oman would need an oil price of about $102 a barrel to break even in 2014.

“We have dealt with similar scenarios in the past, and we are considering a number of steps to be taken in case of lower prices,” Nasser al-Jashmi, undersecretary at the ministry of finance, told Reuters.

Jashmi said the steps would include ways to limit state expenditure, but he did not elaborate. The country is spending billions of dollars on major infrastructure and industrial projects designed to diversify its economy beyond oil.

“So far, there are no changes on the budget. All the planned projects will continue as planned in the current five-year plan,” Jashmi said.

The government posted a budget surplus of 250 million rials ($649 million) in the first six months of this year. Jashmi noted that the oil price for the current year had so far averaged about $105, which meant Oman might avoid a deficit for the full year.

He said he could not reveal the oil price which Oman would project for its 2015 budget, “but we are looking at a conservative scenario”.