MUSCAT The Shura Council held its first session of the third annual sitting for 2009-2010 of the sixth term under the Chairmanship of HE Sheikh Ahmed Bin Mohammed Al Isa’ee, Chairman of the Council, on Monday.
The session was held in the presence of HE Ahmed Bin Abdulnabi Macki, Minister of National Economy and Deputy Chairman of the Financial Affairs and Energy Resources Council, HE Darwish Bin Ismail Al Balushi, Secretary-General at the Ministry of Finance and several senior officials of the economy and finance sectors. The session discussed a report of the expanded economic committee on the study of the State’s General Draft Budget 2010.
The Council has referred its views and remarks on the draft budget to the Council of Ministers as stressed in the Council’s internal regulation issued under Royal Decree No.71/2004.
In his opening speech, Al Isa’ee extended his greetings to the leader of the Omani Renaissance, His Majesty Sultan Qaboos Bin Said, on the occasion of the Sultanate’s 39th glorious National Day, praying to the Almighty to grant His Majesty good health, happiness and the Omani people further progress and prosperity.
Al Isa’ee said the wise policy pursued by His Majesty since he assumed power on July 23, 1970 and his meetings with his faithful people during his annual tours is clear evidence of the wise leadership’s vision that building the country and developing its population will only be achieved via direct contact with citizens.
He said: “A few days ago, we witnessed His Majesty’s annual meet-the-people Royal Tour during which
he gave his directives to his country’s people in Seih Al Makarim in the Wilayat of Sohar and Seih Al Masarat in the Wilayat of Ibri. He also showed his continuous patronage to the Omani women. His Majesty’s noble deeds included holding of the Omani Women’s Symposium in Sohar, construction of new roads, hospitals, social housing units, planting million date palm trees and the symposium on agriculture. Such functions come in support of five-year plans and the State’s annual budget as part of a robust and well-planned Omani economy and sound policies that enable our country to overcome the current global financial crisis.”
Al Isa’ee welcomed Macki and affirmed that the partnership between the Council and the government was based on cooperation and planning aimed at serving the national interest.
Addressing the Council, Macki shed light on the indicators that reflect the outlines of the State’s General Draft Budget for the Fiscal Year 2010 which is the last year of the current Five-Year Annual Plan. He said the revenue estimates and expenditure have been worked out in the budget in accordance with basis and assumptions being highlighted in the explanatory memorandum brought before the Council which aimed at achieving goals and ratios approved in the current Five-Year Plan. It also aims to realise a positive growth that assists in vitalising the economic activities in the Sultanate and creating new opportunities for employment. The total value of expenditure in the budget amounted to 7,180 million rials, 573 million rials or 9 per cent more than Budget 2009, he added. The total general revenue is estimated at 6,380 million rials, 14 per cent more than 2009. This is mainly attributed to calculating the oil revenues at $50 per barrel against $45 per barrel in the 2009 draft budget. The deficit is expected to hit 800 million rials, he said.
Macki said the State’s general revenues for the Fiscal Year 2010 is estimated at 6,380 million rials against 5,614 million rials in Budget 2009, an increase of 14 per cent. Oil and gas revenues constituted 76 per cent of the total revenues. Other revenues stood at 24 per cent. The oil revenues have been worked out at the rate of $50 per barrel, a daily average of oil production at 870,000 barrels, 8 per cent more than 2009 budget estimated production. This average estimate is adequate for a number of reasons, including reports of experts and specialised financial institutions that the average rate will vary from $70 to $80 per barrel.
Provisions should be taken into consideration as oil is affected by a number of factors other than the supply and demand which lead to rapid fluctuation of price in global markets with which it will become difficult to predict prices.
Fixing the oil barrel at $50 is linked to a number of factors, including the volume of estimated expenses for the fiscal year to meet most of the needs of the general expenditure items, identifying the deficit amount as per the employed economic criteria whether attributed to volume of revenues or the GDP, he added.
Macki said net revenues were expected to reach 4,050 million rials ie 63 per cent of the total revenues, whereas oil revenues are envisaged to reach 800 million rials (13 per cent) of total revenues.
The non-oil revenues, except oil and gas are estimated at 1,530 million rials (24 per cent) of total revenues. It is 108 million (8 per cent) more than the 2009 revenue estimates due to a number of reasons being explained in the detailed memorandum of the 2010 budget, he added.
The oil and gas revenues contribute to the financing of the general expenditure by 68 per cent, whereas non-oil revenues (21 per cent), he said.
Macki said the total estimated oil and non-oil revenues amount to 6,380 million which cover 89 per cent of the total general expenditure for 2010. The remaining 11 per cent will be covered from the reserves if estimated oil price decrease more than estimated in the budget, he said.
The volume of the estimated general expense for the fiscal year 2010 amounted to 7,180 million rials against 6,607 million rials in 2009 budget, an increase of 573 million rials than the budget amended in 2009 (9 per cent), he said. The increase in all current civil expenses stood at 55 per cent to account for the inevitable increase related to salaries and wages provisions, growth in educational sector and expansion in providing health services. Increase in the developmental expenses stood at 26 per cent to cover implementation of projects, 21 per cent in investment, companies and subsidies.
He said that revenues and expenditure estimates in the general budget show that the deficit if counted at the rate of $50 will amount to 800 million rials (13 per cent) of the revenues, (3 per cent) of the actual GDP for 2008. Economically wise, such ratio and acceptable, he added. The deficit will be covered from the reserves in case of insufficiency of oil resources, he said.
The general debt is expected to amount to 974 million rials by 2010. The total foreign and local borrowing during 2010 will maintain the same level of the general debt by the end of 2010 which constitutes 4 per cent of the GDP, a good ratio as per the global economic ratio. Thanks to the early repaying policy pursued by the Ministry of Finance in the past five years, he added.
The amount of general expense approved in the budget is up which meets all civil or security perspective needs within the availed resources. It also takes into consideration the new commitments as a result of expansion in the governmental services in various sectors and development fields. Meeting the different development requirements on the one hand were considered and maintaining an acceptable economic ratio of the financial deficit to make Budget 2010 an ambitious one and enhancing the good economic growth which was achieved over the years.
Macki concluded his speech by stressing the importance of existing cooperation between the financial and monetary policy to ensure a robust economy that targets growth and development, control inflation and stability of prices and purchase value of the rial. He also said that the development achieved in the Sultanate in all spheres is a great achievement by all means as witnessed by specialised and credible international organisations and research centres.
Oman News Agency
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