Darwish Al Balushi, Minister of Financial Affairs, said that Oman's government will probably begin reducing some state subsidies by 2015 as the plunge in world oil prices threatens its finances, Gulf Daily News reported.
Oman's original budget plan for 2014 expected that the government would have a deficit with an average oil price of $85 a barrel. For most of 2014, the oil price has been more than that, but in the recent months, however, the price has plunged to as low as $82.
The country has been looking for ways to reform its costly and sometimes wasteful subsidy system; cutting spending would be politically sensitive. Omani officials have highlighted that the government may resort to the international debt market for the first time since 1997 in order to bridge a budget deficit.
In an interview during a meeting of Arab finance ministers and central bank governors in Kuwait, Balushi said the current subsidy system has no effect on poorer people. Asked whether cuts will be applied next year, he replied: "Yes, I think the time is probable and especially with the decline in oil prices. I think the people would be more understanding now, more accepting. They realize that this was natural wealth that is being overused, wasted..."
"Everybody gets, people who deserve and people who do not. I think if we rationalize it and use the saving for better priorities, that will definitely have a return for the people of Oman," Balushi noted, adding that the subsidy reforms will proceed gradually and make sure people who deserve aid are not affected.
He did not reveal more details about which subsidies would be reduced, but he has previously described petrol as a main object.
Oman's original budget plan for 2014 expected that the government would have a deficit with an average oil price of $85 a barrel. For most of 2014, the oil price has been more than that, but in the recent months, however, the price has plunged to as low as $82.
The country has been looking for ways to reform its costly and sometimes wasteful subsidy system; cutting spending would be politically sensitive. Omani officials have highlighted that the government may resort to the international debt market for the first time since 1997 in order to bridge a budget deficit.
In an interview during a meeting of Arab finance ministers and central bank governors in Kuwait, Balushi said the current subsidy system has no effect on poorer people. Asked whether cuts will be applied next year, he replied: "Yes, I think the time is probable and especially with the decline in oil prices. I think the people would be more understanding now, more accepting. They realize that this was natural wealth that is being overused, wasted..."
"Everybody gets, people who deserve and people who do not. I think if we rationalize it and use the saving for better priorities, that will definitely have a return for the people of Oman," Balushi noted, adding that the subsidy reforms will proceed gradually and make sure people who deserve aid are not affected.
He did not reveal more details about which subsidies would be reduced, but he has previously described petrol as a main object.
Source:
Mubasher
