Oman Budget 2013 & Mid-term Review of 8th five year plan ;

Record spending levels drives Budget 2013

Research team Joice Mathew Santhosh Balakrishnan

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Budget 2013: Economic growth on track, spending attractive to drive such growth.
The Sultanate of Oman announced its Budget 2013 by the Minister Responsible for Financial Affairs, HE Darwish Ismaeel al Balushi on 3rd Jan , 2013. The budget announcement marks the third year of the 8th five year plan (8th FYP) outlined in 2011-15. The budget has unraveled most of the concerns and focus on core GDP growth despite an array of events which affected the global and regional economy over the last two years. The Sultanates planned spending in 2013 has given cushion to some of the sectors in the non-oil sector space, which makes its diversification path more clear to achieve the vision 2020.

According to the budget 2013, the state's public revenue for 2013 are estimated to be about RO 11.16 billion compared to RO 8.8 billion in the 2012 budget, growth rate of 27%.
The expenditure is estimated to be RO 12.9 billion in 2013 compared to RO 10 billion in the 2012 Budget, an increase of 29% The government has allocated large increase in participation and subsidy to private sector expenditure; an increase of 95% from 2012 Budget to RO 1.65 billion in 2013. The budget deficit is estimated at RO 1.7 billion in 2013 from RO 1.2 billion in 2012, which implies a deficit at 15% of revenue, the highest of the last five year budgets. The budget aims to grow its GDP growth at 7% and non oil GDP at 10.6%, while limiting inflation at 3% for 2013. Oil price is budgeted at US$ 85/bbl in 2013 from US$75/bbl in 2012 and will result in Oil& Gas revenues accounting to 84% of total revenue, whilst the non oil revenue forming the rest. Oman expects to produce 930K Bpd of crude oil in its 2013 budget from 915K Bpd as outlined in its 2012 Budget.

The Budget also envisaged RO 1.1 billion spending in infrastructure projects, with c.RO 550 million for roads and other infrastructure projects. This is in addition to the ongoing projects like Muscat and Salalah airports, Batinah Expressway, Muscat and Salalah expansion.
The budget focuses on spending in social sectors primarily in education with RO 1.3 billion spending for 2013 and also revises its spending plans outlined in the 8th FYP.

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Key objectives of the Budget 2013
Highlights: Stimulating the economic growth by increasing the Government expenditure, especially the development spending. Providing the financial allocations necessary for the new employment in the different units of the states administrative apparatus and the Government companies and establishments. Increasing the spending on the sectors of education, training, health, housing and social insurance Preserving the current admission rates of the outcomes of the general diploma certificates in the higher education institutions. Providing the financial allocations necessary for the internal and external training coupled with employment programs. Expanding the provision of health services in the various Governorates of the Sultanate. Continuing the subsidy for the housing sector through housing assistances and housing loans programs in addition to enhancing the housing loans provided by Oman Housing Bank. Providing the financial allocations necessary for the social security and Al Wafa social centers. Providing financial allocations for some goods and services such as the electricity, water, fuel and the basic foodstuffs. Completing the infrastructure projects such as airports, ports, roads, developing the industrial estates, water and wastewater projects and providing the liquidity necessary for implementing the development projects planned to commence at the year 2013. Partially finance the deficit of the budget through issuing development bonds, in the market, to encourage the domestic saving and enhancing the efficacy of utilizing the domestic savings in the local market. Transferring the financial surpluses that may result from the higher oil prices for enhancing savings and the Government financial reserves. Preserving the current level of the public debt in terms of its absolute volume and its ratio to the domestic product.

Source: ONA

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Omans Public Finance: Re-aligning short term strategies to achieve superior performance over long term
Revenue set to be slightly higher in 2013 ; Oil revenues dominates the budget Budget 2013 has earmarked a revenue of RO 11.16 billion, higher by 27% to 2012 Budget revenue of RO 8.8 billion. This difference is due to a 10% increase in budgeted oil price of USD 85/bbl in 2013 from USD75/bbl in 2012. We expect such increase is mainly to support the robust spending plans outlined in the 8th FYP. We believe Oman is likely to realize an average price of USD 105-110/bbl in 2013 which could result in a 20-25% variance to the budgeted revenue of RO 11.16 billion. Historically Oman had an average variance of RO 1.2-1.5 billion in revenue during 2004-11, however the last two years had generated a revenue in excess of RO 5.2 billion upon elevated oil prices. The excess has been primarily generated from Oil based revenues to the tune of 4.6 billion, while gas based and non oil revenue has been in the range of RO 700 million. As of 2012, Omans actual Oil revenue alone accounted to 75% of total revenue, while gas accounted to 11% and non oil sector accounts for the rest.

Expenditure could be remarkably higher than 2012; spending to revenue, heading back to 2004-07 levels
Oman has allocated expenditure to the tune of RO 12.9 billion focusing on allocation to the most of the sectors, with spending increasing by 29% YoY, an addition of RO 2.92 billion. This could result in overall expenditure at 116% of revenue, highest ever recorded in Oman since 2007, though the same is lower compared to 2004-07 average of 117%. The allocation has been primarily to meet the current expenditure catering to civil and defense sectors, which together accounts to 68% of total revenue. Oman has increased its allocation to the civil ministry focusing on education, health and infrastructure sectors with more projects aiming such development. It is noticeable, that government aims to increase its exposure focusing the social needs with its higher subsidies, accounting to 15% of revenue, the highest since 2004-12. However current and capital expenditure allocation has witnessed a normal trend.

Deficit, the highest since 2007; though lowest on a % of revenue basis, not absolute levels the highest The 2013 budget expects a deficit of RO 1.7 billion owing to robust spending plans and additional allocation to some of the sectors, primarily infrastructure sectors. The additional allocation increasing by 35% to the amount as outlined in the 8th FYP. We believe the government has been re-aligning strategies to achieve growth rate beating expectations. We expect such deficit is more a budget notion and will result in deficit being a surplus for 2013. The country made a surplus of RO 1 billion in 2012, much ahead of the budgeted deficit in 2012 to the tune of RO 1.2 billion. However, the surplus in 2012 will be utilized to partially finance the deficit for 2013 and may additionally raise RO 350 million through external borrowings and RO 350 million from reserves.

Source: MONE *2012 Headline figures are as per Budget

Press release

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Revenue: Oil revenues could make a difference; Non-Oil sector continue to grow at a stable rate
Oil Revenues set to be the key component;2013 still positive Omans 2013 Budget has allocated RO 8.06 billion revenues to flow from crude oil exports, which is 32% higher than RO 6.1 billion allocated in 2012. Oil revenues accounts to lions share of revenue accounting to 74% on an average during 2010-12 on a realized basis, while the budget estimates 72% of revenue from oil sector in 2013. We believe Oman is likely to achieve such targets smoothly on the back of lower vulnerability affecting global oil demand and prices. We believe growth engines in BRIC and developed economies still foresee large demand in oil consumption. Though the news of shale gas production could have a slight impact over the long term, these worries are likely not to haunt over the short term. Oman produced 335 mn barrels of oil in 2012* achieving a growth rate of 4% YoY from 323 Mn barrels in 2011, while it exported 278 mn barrels of crude oil in 2012 from 269 mn bbls in 2011, a growth of 3%. Oman witnessed robust growth in domestic demand which are provided on a subsidized basis to industries and civilian transport purposes

Gas revenues set at 12% of total revenues; export opportunities limited on low scale of production Oman expects its gas based revenues to be at 12% of revenue for its 2013 Budget which is estimated to be RO 1.3 billion in 2013 from RO 1.1 billion allocated in 2012. However the actual data for 2012 suggest, Oman achieved revenue of RO 1.5 billion in 2012*, a variance of RO 0.3 billion from Budget 2012. Oman produced 37.7 Bn cm of Natural Gas in 2012*, a growth of 9% YoY from 2012 production of 34.7 bn cm with c.20% of gas being imported from neighboring countries due to shortage in production to meet the demands of the social sectors primarily power plants. We believe growth in gas based revenues could be limited due to limitations in production and availability of new gas blocks.

Non Oil revenues budgeted matching historical trends Non oil revenues are estimated to be at 16% of total revenue amounting to RO 1.8 billion, lower to 18% of revenue allocated in Budget 2012 amounting to RO 1.6 billion, but still higher on absolute basis. However the increasing revenue proportion from oil based revenues resulted in non oil revenues to be at 14% of total revenue. This is despite government efforts to diversify the economy and make it less dependent on oil based revenue. The non oil revenue has shown a lower variance to actuals, hence we expect such revenue streams on stabilized level. Revenue from Corporate income taxes and customs duties forms the majority of non oil based revenues

Source: MONE *2012 figures are on annualized basis for

comparison purposes as only Nov, 2012 data are available

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Expenditure allocation, the highest since 2007
Current Expenditure allocations sets record spending; increase of RO 1.7 billion The budget allocated RO 8.1 billion in current expenditure in 2013 from RO 6.45 billion in 2012 Budget. The majority of the current expenditure are towards Civil ministries and Defense, while Oil& Gas expenditures and other expenditures forms a small portion. Defense sector witnessed increased allocation amounting to RO 3.6 billion in 2013 from RO 2.6 billion in 2012 Budget. However the actuals in 2012 surpassed the budget. We expect current expenditure in civil ministries to increase due to the impact of job creation in government sectors and salary hike to staffs. The government has allocated RO 4 billion in 2013 from RO 3.5 billion in 2012, however actuals surpassed the budget in 2012 as well. Oil and Gas production expenditures allocation has increased by RO 100 million in 2013. Historically, such sectors witnessed only 2-3% allocation, with the government continuing such trends in 2013.

Investment expenditure on the higher side; but government intends to spend based on 1H13 trends The allocations to investment expenditure amounted to RO 3.15 billion in 2013 from RO 2.71 billion in 2012, a growth rate of 16%. It accounted to 28% of total revenue in 2013, but lower to 2012 Budget. However increased allocations to budget is dependent on the actual revenue realized in in 1H13, which could result in higher allocation towards the second half of the year, like the same was witnessed in 2012 One of the as well. The investment expenditure in 2012 surpassed due to higher allocation towards projects related highest to infrastructure. spending The spending has been primarily on the development expenditure of civil ministries and the second highest allocation is towards Oil& Gas production expenditures. The budget tried to maintain the same proportion in 2012, which we believe is to replicate the same strategy adopted in 2012.

Subsidy expenditure set at higher limit to support social needs and local businesses The Budget allocated 15% of revenue to participation and subsidy to private sector for increasing support to the domestic businesses, thereby supporting citizens of the country. It allocated budget of RO 1.65 billion in 2013 from RO 0.85 billion in 2012, an increase of 95% YoY. The same resulted in highest allocation in Omans history, for subsidy and participation expenditure. The majority of financial allocations are for the subsidy for the interests on housing and development loans and subsidy for electricity, water, fuel and some basic foodstuffs which amounts to RO 1.3 billion. We believe the strive to improve basic social infrastructure has been the primary reason for such hike in this segment.

Source: MONE *2012 figures are on 11 month basis hence

cannot be compared to budgeted as only Nov, 2012 data are available.

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

2013 Budgeted projects and spending at a glance
Sector Wise Spending Allocation for Budget 2013 RO Mn % of total

Key highlights of spending focusing social sectors

Roads, Airports and Ports Sector Work at Khassab lima Daba road Dualization of Mahdah - Al Raw dah road Rehabilitation of Sinaw -Mohoot- Al Duqm road Asphalting Wadi Al Mayh road Complete the implementation of Sohar airport project Construction of Hasik port to receive the express ferries Adding new quays at the Port of Duqm Health and Education Sectors Establishing Mohoot referral hospital Establishing health centers in some Wilayats Construction of Jalan central hospital in South Al Sharqiya Construction of (28) schools to meet the inevitable grow th and replacement Water and Recharging Dam s Sector Construction of w ater netw orks in the Wilayat of Samael Implementing the underground recharging dams project in Ibri and Sur Culture and Youth Centers Sector Oman Cultural Complex Consultancy for the construction of sports stadium project in Al Musunah Wastew ater Sector Construction of w astew ater netw ork in Al Suw aiq and Al Mudaibhi Financing the w astew ater projects in Muscat and Salalah Agricultural and Fisheries Sector Construction of fishing port at Al Shw imiah in Al Halaniat islands Constructing and implementing projects in the agricultural sector Tourism Sector Maritime museum project in Sur Financing the projects implemented by OMRAN Total Spending

270 40 80 23 56 40 48

25% 4% 7% 2% 5% 4% 4%

8 6 35 NA

1% 1% 3% NM

11 50

1% 5%

78 9 19 200 6 12 5 104 1101

7% 1% 0% 0 2% 18% 0% 1% 1% 0% 0% 9% 100%

Source: ONA

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

7th and 8th Five Year Plans: Oman continuously surpassed budget
Actual Vs Budgeted performance of 7th and 8th FYP The 8th FYP revenue target has been in the range of RO 37.5 billion while the combined revenue for 2011-12 alone has reached RO 26.7 billion. However the actual revenue has surpassed the combined 2011-12 revenue from RO 14.5 billion (budgeted) to RO 26.3 billion in 2011-12 (Actuals).However the 7th five year plan revenue had a variance of 30% to actuals, with budgeted revenue at RO 25.5 billion (7th FYP 2006-10) compared to actual revenue of RO 33.2 billion (7th FYP Actual), while the 8th five year plan is likely to have a much higher deviation due to impact of higher actual and budgeted oil prices. The government aims to increase oil revenues through planned capital expenditure on oil exploration activities and target a production of 1mn B/pd by 2015. The increased EOR (Enhanced Oil Recovery) efforts drives such assumptions on possibility of higher revenues, though the government outlined an increase in volumes to the tune of 930K bbl/day in 2013. The 2011-12 spending has already surpassed and achieved 54% of the targeted spending which resulted in higher and revised allocation to the 8th five year plan with revised approbations of RO 16.1 billion compared with the original allocations of RO 12.1 billion, an increase of RO 4.0 billion. The approbations, which were approved during the two years (2011-2012) as an addition to the financial framework of the current Five Year Plan amounted to about RO 15 billion, therefore the volume of the expenditure for the Plan will increase from RO 43 billion, in accordance with the original estimates of the plan, to about RO 58 billion, an increase of 35%.The increase in allocations are driven by an increase in approbations for the additional projects that have been developed in all the economic sectors, in addition to enhancing the approbations for some projects in light of the results of tenders. Overall the country is likely to face a surplus provided oil price is at targeted levels and deterioration in events which affected the global oil demand and prices.

7th FYP Budget 2006 2007 2008 2009 2010 Avg/Year

7th FYP Actual Avg/Year

7th FYP Budget Total

7th FYP Actuals Total 2006 2007 2008 2009 2010

8th FYP Budget Avg/Year

2011-13 Actual Avg/Year

8th FYP Budget Total

2011-12 Actuals Total

Oil and Gas Non Oil Total Revenues Current Expenditure Investment Exp. Participation & Sbdy Total Expenditure Surplus/(Deficit)

2.91 0.67 3.59 2.92 1.09 0.23 4.24 -0.65

7th Five Year Plan 3.57 4.23 4.19 0.93 1.17 1.42 4.49 3.14 1.49 0.26 4.89 -0.40 5.40 3.55 1.87 0.39 5.80 -0.40 5.61 4.02 1.92 0.49 6.42 -0.81

4.85 1.53 6.38 4.43 2.13 0.62 7.18 -0.80

2006-10F 2006-10A 2006-10F 2006-10A 3.95 5.19 19.75 25.95 1.14 1.45 5.72 7.25 5.09 3.61 1.70 0.39 5.71 -0.61 6.64 4.16 2.09 0.50 6.00 -0.60 25.47 18.06 8.50 1.97 28.53 -3.06 33.21 20.82 10.47 2.49 30.00 -3.02

5.88 1.40 7.28 4.78 2.51 0.84 8.13 -0.85

8th Five Year Plan 5.80 5.74 1.45 1.54 7.25 5.04 2.61 0.85 8.49 -1.24 7.28 5.28 2.49 0.79 8.56 -1.28

5.93 1.66 7.59 5.49 2.50 0.64 8.63 -1.05

6.32 1.78 8.10 5.79 2.50 0.61 8.90 -0.80

2011-15F 2011-13F 2011-15F 2011-12A 5.93 7.48 29.65 22.90 1.57 1.60 7.85 3.78 7.50 5.27 2.52 0.75 8.54 -1.04 7.28 6.44 2.80 1.11 10.35 -1.25 37.50 26.37 12.61 3.73 42.71 -5.22 26.68 13.39 6.84 3.70 23.93 2.86

Source: MONE

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Appendix: 8th Five Year Plan: 2011-15-Recalling the project schedules outlined in 8th FYP
% of % of % of % of (RO Mn) Sector total Government's planned and projected spending for 8th five year plan-2011-15 (RO Mn) Sector total Government's planned and projected spending for 8th five year plan-2011-15 468.7 28% 8.4% Development of human resources programme for abroad education for (1000) grants 100.0 41% 1.8% Completion of projects of Muscat International Airport and Salalah airport 706.6 43% 12.6% Construction of (32) new schools to cancel evening classes 18.4 8% 0.3% departure building 294.0 18% 5.3% Construction of (15) new schools for total replacement 8.8 4% 0.2% construction of Salalah airport 183.7 11% 3.3% Construction of (65) new schools to face the growth in number of students 36.0 15% 0.6% Completion of the regional airports in Sohar, Adam, Ras Al Hadd and Ad Duqum 1653.0 100% 29.6% Various internal scholarships (social security, grants, general medicine) 81.5 33% 1.5% Airports sector: Commencing execution project of sea port and floating dock in Al Halaniyat 39.0 8% 0.7% Education sector: 244.7 100% 4.4% Completion of infrastructure projects of, docks related to Ad Duqum port 216.0 43% 3.9% Physical support of the national training projects 27.2 50% 0.5% Constructions of quays (7,8,9) at Salalah port 184.1 37% 3.3% Projects of establishing, preparing, development and replacement of national cadres 26.9 50% 0.5% Construction of ports and fast ferries in Salalah, Hasik, Al Shuaymiya and Masirah 63.0 13% 1.1% Vocational training sector: 54.1 100% 1.0% Seaports sector 502.1 100% 9.0% Rehabilitation of Sumail hospital 10.0 4% 0.2% Integrated management for date palm trees pests 8.4 53% 0.2% Al Muidhabi polyclinic 2.0 1% 0.0% The national project for immunization of animal wealth 4.4 28% 0.1% Muscat referral hospital 140.0 52% 2.5% The national strategy for date palm trees 3.2 20% 0.1% Salalah hospital 48.0 18% 0.9% Agriculture sector: 16.0 100% 0.3% 25.6 58% 0.5% Construction of new hospitals in As Suwaiq, Mahout, Sinaw, Dhalkut, Al Muziunah 55.5 21% 1.0% Construction of marine fishing ports in Barka, Al Musanah, Muhout, Sadah, Al Shuiymiah 9.6 22% 0.2% Construction of new health centres at various Wilayats 8.0 3% 0.1% Development of infrastructure to raise quality of fisheries and pisciculture 8.6 20% 0.2% Construction of polyclinics in Al Kamil, Liwa, Mutrah and Nakhal 7.2 3% 0.1% Establishing facilities in a number of fisheries landing areas 43.8 100% 0.8% Health sector: 270.7 100% 4.8% Marine fishing ports sector 12.8 7% 0.2% Construction of courts' complexes in Khasab, Sur and A'Seeb 16.0 38% 0.3% Construction of central markets and sheds in the various Wilayats 27.2 16% 0.5% Construction of a number of first instance courts at different regions 26.5 62% 0.5% Compensations of Al Hafa area development project in Salalah 12.0 7% 0.2% Justice sector: 42.5 100% 0.8% The national strategy of urban development Compensations for properties affected by Al Batinah coastal road (phase2) 120.0 70% 2.1% Housing supports in different regions in accordance to the Royal Grant 200.0 45% 3.6% Town planning and municipalities' services sector: 172.0 100% 3.1% Housing loans projects in the different regions 48.0 11% 0.9% Construction of sanitary drainage networks and plants in Barka and Al Musanah 16.8 23% 0.3% Construction of the replacement houses for those affected by Al Batinah coastal road 200.0 45% 3.6% Construction of (4) sanitary drainage networks and plants in some Wilayats 32.0 44% 0.6% Housing sector: 448.0 100% 8.0% Extension of the sanitary drainage network to the central areas in Sohar 16.0 22% 0.3% Establishment of water pipeline and distribution for the psychiatric hospital 95.2 21% 1.7% Collection, transport and treatment of sanitary drainage water in Dhofar 8.0 11% 0.1% Water supply project from Wadi Dheqeh to Muscat and Quriyat 48.0 11% 0.9% Sanitary drainage projects: 72.8 100% 1.3% Water supply networks in vaccordance to the water sector strategy 81.8 18% 1.5% Protection dam above Al Khoudh in A'Seeb 24.0 63% 0.4% Water supply networks and accessories in various Wilayats 186.7 41% 3.3% Construction of recharging dams in Izki, Al Mudhaibi , Ibra, Ibri and Nizwa 14.4 38% 0.3% 38.4 100% 0.7% Construction of emergency reservoirs in Muscat Governorate 40.0 9% 0.7% Dams sector: 20.0 38% 0.4% Water sector: 451.7 100% 8.1% Digital ground television broadcasting 32.0 62% 0.6% Duality of Ibri-Jibrin road 73.0 6% 1.3% Oman cultural complex 52.0 100% 0.9% Duality of Nizwa-Thumrait road 250.0 20% 4.5% Information and culture sector: 6.0 24% 0.1% Construction of the third lane of the intersection of Al Mualih-Bait Al Barkah 32.4 3% 0.6% Improvements in Sultan Qaboos Sports Complex in Baushar 5.0 20% 0.1% Addressing traffic congestions in Al Burj road in Ruwi 25.5 2% 0.5% Improvements and rehabilitation of sports complexes and clubs Construction of new sports complexes in Ibra and Al Musanah 13.6 55% 0.2% Developing the roads' network in Muscat Governorate 24.0 2% 0.4% Youth and sports sector 24.6 100% 0.4% Wadi Hyat (Al Hamra)-Wadi Bani Auwf road (phase 2) 13.6 1% 0.2% The national centre to ensure continuance of work by IT systems 19.2 11% 0.3% Duality ofBid- Sur road (first and second phases) 240.0 19% 4.3% The national initiative to activate the e-government services 13.2 8% 0.2% Al Batinah express way 250.0 20% 4.5% The national sector for e-content and upgrading applications 8.0 5% 0.1% Raising efficiency of Sinaw-Mahout-Ad Duqum road 80.0 6% 1.4% Support for implementation of IT incubators projects 4.0 2% 0.1% Al Batinah coastal road (phase3) 200.0 16% 3.6% project of the infrastructure of optic fiber network 106.0 62% 1.9% Internal roads paving in various Wilayats 44.8 4% 0.8% Royal Grant of RO. (20) million for provision of computers 20.0 12% 0.4% Roads sector: 1233.3 100% 22.1% Communications and information technology sector 170.4 100% 3.0%

Source:ONA

Oman Economic Research January 22, 2013

Oman Budget 2013: Overview

Appendix: Comparing the 7th & 8th FYP to actual performance
RO Bn Oil and Gas Revenue Non Oil gas revenue Total Revenues Current Expenditure Investment Exp. Participation & Sby Total Expenditure Surplus/(Deficit) RO Bn Oil and Gas Revenue Non Oil gas revenue Total Revenues Current Expenditure Investment Exp. Participation & Sby Total Expenditure Surplus/(Deficit) 2006 2007 2008 2009 7th Five Year Plan 2.91 3.57 4.23 4.19 0.67 0.93 1.17 1.42 3.59 2.92 1.09 0.23 4.24 -0.65 2011 4.49 3.14 1.49 0.26 4.89 -0.40 5.40 3.55 1.87 0.39 5.80 -0.40 5.61 4.02 1.92 0.49 6.42 -0.81 2010 Average Total 4.85 1.53 6.38 4.43 2.13 0.62 7.18 -0.80 3.95 1.14 5.09 3.61 1.70 0.39 5.71 -0.61 19.75 5.72 25.47 18.06 8.50 1.97 28.53 -3.06 RO Bn Oil and Gas Revenue Non Oil gas revenue Total Revenues Current Expenditure Investment Exp. Participation & Sby Total Expenditure Surplus/(Deficit) RO Bn Oil and Gas Revenue Non Oil gas revenue Total Revenues Current Expenditure Investment Exp. Participation & Sby Total Expenditure Surplus/(Deficit) 2006 2007 2008 Actuals 3.84 4.49 6.00 1.14 1.43 1.64 4.98 3.53 1.20 0.21 4.94 0.04 5.92 3.86 1.70 0.33 5.88 0.04 7.64 4.42 2.28 0.86 7.56 0.08 2009 5.22 1.53 6.75 4.22 2.69 0.52 7.43 -0.68 2014 2010 Average 6.40 1.52 7.92 4.79 2.60 0.58 7.96 -0.05 5.19 1.45 6.64 4.16 2.09 0.50 6.75 -0.11 Total 25.95 7.25 33.20 20.82 10.47 2.49 33.77 0.00 -0.57 Total 21.91 3.06 25.37 11.96 5.25 3.12 20.32 5.05

2012 2013 2014 8th Five Year Plan 5.88 5.80 5.74 5.93 1.40 1.45 1.54 1.66 7.28 4.78 2.51 0.84 8.13 7.25 5.04 2.61 0.85 8.49 -1.24 7.28 5.28 2.49 0.79 8.56 -1.28 7.59 5.49 2.50 0.64 8.63 -1.05

2015 Average Total 6.32 1.78 8.10 5.79 2.50 0.61 8.90 -0.80 5.93 1.57 7.50 5.27 2.52 0.75 8.54 -1.04 29.65 7.85 37.50 26.37 12.61 3.73 42.71 0.00 -5.22

2011 2012* 2013 Actuals 10.84 11.07 1.65 1.41 12.49 12.88 6.10 5.86 2.96 2.29 1.68 1.45 10.74 1.75 9.58 3.29

2015 Average 10.95 1.53 12.69 5.98 2.62 1.56 10.16 2.52

-0.85

Source: MONE *2012 figures are on actual basis and cannot be compared to 2011 actuals as data till Nov, 2012 are available with MONE and MOG.

Oman Economic Research January 22, 2013

10

Oman Budget 2013: Overview

Appendix : Growth rates across selective segments (Acutal Vs Budgeted)

Source: MONE *2012 figures are on annualized basis for comparison purposes as data till Nov, 2012 are available with MONE and MOG. However our estimates are on best effort basis to match to actual

Oman Economic Research January 22, 2013

11

Oman Budget 2013: Overview

Appendix : Composition of public finance (Actual vs Budgeted)

Source: MONE *2012 figures are on annualized basis for comparison purposes as data till Nov, 2012 are available with MONE and MOG. However our estimates are on best effort basis to match to actual

Oman Economic Research January 22, 2013

12

Oman Budget 2013: Overview

Budgeted Expenditure and Allocation to key Sectors

Source: MONE and Budget Press Releases *2012 figures are on a 11-Month basis and not for comparison purposes as data till Nov, 2012 are available with MONE and MOG.

Oman Economic Research January 22, 2013

13

Oman Budget 2013: Overview

Appendix: Capital and current Expenditure (Actual vs Budgeted) review in charts

Source: MONE *2012 figures are on annualized basis for comparison purposes as data till Nov, 2012 are available with MONE and MOG. However our estimates are on best effort basis to match to actual

Oman Economic Research January 22, 2013

14

Oman Budget 2013: Overview

Appendix : Actual Public Finance data Vs Budgeted data
Public Finance (In RO Million) Net Oil Revenues Gas Revenues Oil & Gas Revenues Non Oil Revenues* (Inc.Duties,IT,Capital rev. &Others Revenues Defence & National Security Civil Ministries Interest Paid on Loans Gas Production Expenditures Oil Production Expenditures Current Expenditure (A) Development Expenditure for Civil Ministries Capital Expenditure for Civil Ministries Oil Production Expenditures Gas Production Expenditures Investm ent Expenditure (B) Subsidies to Dev. & Housing loans Interests International, Regional and Local organization Electricity Sector Participation & Subsidy To Private Sector (C) Total Expenditure (A+B+C) Surplus/Deficit Oil price (US$/Bbl) 2008 5,093 910 6,003 1,636 7,639 1,775 2,348 51 64 182 4,420 1,188 47 649 397 2,281 14 740 105 859 7,560 78 101 Actuals 2009 4,491 731 5,222 1,527 6,748 1,727 2,217 45 72 158 4,219 1,589 45 696 361 2,691 14 356 100 519 7,429 -680 57 2010 5,470 930 6,400 1,515 7,915 1,888 2,612 37 75 177 4,790 1,648 48 614 287 2,597 0 0 0 577 7,964 -48 77 2011 9,665 1173 10,838 1,654 12,491 2,564 3,187 38 80 235 6,104 1,872 54 624 409 2,960 0 0 0 1675 10,738 1,867 103 11M12 9,663 1412 11,075 1,808 12,882 2,919 2,578 37 76 248 5,858 1,259 25 644 358 2,285 0 0 0 1446 9,589 3,293 110 2008 3,610 620 4,230 1,170 5,400 1,360 1,905 55 50 180 3,550 725 20 670 450 1,865 0 400 0 385 6,200 -400 55 2009 3,522 670 4,192 1,422 5,614 1,545 2,149 54 76 196 4,020 800 21 679 419 1,919 18 355 112 485 6,424 -810 45 Budgeted 2010 4,050 800 4,850 1,530 6,380 1,615 2,480 45 80 212 4,432 950 20 725 433 2,128 20 460 140 620 7,180 -800 50 2011 4,956 920 5,876 1,404 7,280 1,650 2,750 75 80 225 4,760 1,200 20 718 594 2,532 0 0 0 838 8,130 -850 58 2012* 6,100 1100 7,200 1,600 8,800 2,585 3,475 45 90 250 6,445 1,400 25 650 635 2,710 0 0 0 845 10,000 -1,200 75 2013 8,055 1300 9,355 1,800 11,155 3,555 4,070 60 80 360 8,125 1,800 30 660 655 3,145 0 0 0 1645 12,915 -1,700 85

Source: MONE and Budget Press Releases *2012 figures are on a 11-Month basis and cannot be used for comparison purposes as data till Nov, 2012 are available with MONE and MOG.

Oman Economic Research January 22, 2013

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Key Contacts
Research Team Joice Mathew Senior Manager - Research E-Mail: joice@usoman.com Tel: +968 2476 3311 Santhosh Balakrishnan Research Analyst E-Mail: santhosh@usoman.com Tel: +968 2476 3319 Head Office P.O.BOX 2566, PC 112 Next to Ruwi Hotel Ruwi, Muscat Tel: +968 2476 3300

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Oman Economic Research January 22, 2013

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