(Bloomberg) --
Oman's government has asked ministries to slow down projects and identify spending priorities as it looks to tackle the widest budget deficit among Gulf Arab economies.
In a directive to ministries ahead of the country's fiscal preparation for 2021, the sultanate's Finance Ministry told the government bodies to avoid exceeding the spending limits set down by the revised budget this year.
The aim is “to prioritize the execution of essential projects that serve economic and social objectives while also slowing down non-essential projects as well as prioritizing the operating of completed projects,” according to a guidance published on the Finance Ministry's website.
Deemed the most vulnerable among the economies in the six-nation Gulf Cooperation Council even before the virus outbreak and the crash in oil, Oman is on track to run its biggest budget shortfall since 2016, estimated this year at 16.9% of gross domestic product by the International Monetary Fund. Oman's sovereign rating was downgraded twice in 2020 by Moody's Investors Service.
To ease strains on public finances this year, Oman trimmed its budget expenditure and announced liquidity support in an effort to provide some relief from the Covid-19 shock. It's also discussed the possibility of financial aid from wealthier neighbors, people with knowledge of the matter told Bloomberg.
Ministries were asked to enhance collaboration between public and private sectors to achieve financial gains. The Finance Ministry also noted that spending should be aimed at providing citizens with essential services such as health, education and social welfare, according to the statement.
Oman aims to drive down the deficit amid “exceptional economic circumstances” of the pandemic and low oil prices, it said. That requires “continuous measures to guarantee financial stability and sustainability.”
©2020 Bloomberg L.P.
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