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Oman has taken concrete measures to curb budget spending, cutting it by 11%, and introducing economic reforms following the steep fall in oil prices. It is cutting subsidies by a whopping 56%, raising petroleum product prices (mainly gasoline and diesel) and increasing corporate tax as it hopes to tackle a large deficit of OR3.3bn ($8.6bn at OR1=$2.60).
The new budget seeks to cut subsidies to OR400mn for 2016 from OR900mn for 2015. Subsidies in 2016 will be allocated to the electricity sector, petroleum products, housing loans and support for state companies. Subsidies will make up just 3.4% of Oman’s planned OR11.9bn spend next year, following in the footsteps of other Gulf and Middle-East countries which have looked to slash subsidies in the wake of sustained low oil prices. It is no secret that Oman is heavily dependent on cash from its oil and gas reserves but it will attempt to curb that dependence somewhat, budgeting for oil and gas revenue to make up 72% of its revenue, compared to 78% last year.
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