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Asia Today ISSN 1861-4604 Friday, October 19, 2018

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Oman plans to reduce subsidies next year, says finance minister

Ineffective subsidy system

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Darwish bin Ismail Al Balushi. Photo: Times of Oman news

Kuwait City: Oman's government is likely to start cutting some state subsidies next year as the decline in global oil prices pressures its finances, Minister Responsible for Financial Affairs Darwish bin Ismail Al Balushi said on Saturday.

The country's original budget plan for 2014 assumed the government would run a deficit with an average oil price of $85 a barrel. For most of this year the oil price has been much higher, but in the last few months it has dropped steeply to as low as $82.

Ineffective subsidy system
Oman has been considering ways to reform its costly and sometimes wasteful subsidy system, though reductions in spending would be politically sensitive. Asked by Reuters whether cuts were likely next year, Balushi said; "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 realise that this was natural wealth that is being overused, wasted..." In an interview on the sidelines of a meeting of Gulf Arab finance ministers and central bank governors in Kuwait, Balushi also said the current subsidy system was ineffective because it did not focus on poorer people.

Priorities
"Everybody gets, people who deserve and people who do not. I think if we rationalise it and use the saving for better priorities, that will definitely have a return for the people of Oman."

The subsidy reforms will proceed gradually and make sure people who deserve state aid are not affected, Balushi said.

He did not give details of which subsidies would be cut, but in the past has described petrol as an obvious target.

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