2022 Budget subsidy support broadly on par with 2021 levels

@conradprabhu –

Subsidy support provided in the 2022 General Budget across a number of services broadly tracks allocations made by the Omani government during the previous year.

According to the Ministry of Finance, the latest budgeted assistance is in line with the government’s overall strategy to gradually rollback most subsidies over the course of the Medium Term Fiscal Plan (2021 – 2025), while redirecting part of this support towards targeted low-income incomes.

An allocation of RO 575 million has been made towards electricity and water subsidies during 2022. This is significant lower than levels seen a couple of years ago before the introduction of Cost Reflective Tariffs (CRT). Last year, power and water subsidies were rolled back for non-Omani consumers – a move that will be gradually extended to cover Omani customers as well.

The subsidy allocation towards electricity services alone was RO 500 million in the 2022 Budget, on par with the budgeted allocation during the previous year (although preliminary results show the figure rising to RO 550 million for 2021).

A grant of RO 35 million was also included in the 2022 Budget towards subsidizing retail petrol and diesel supply to low-income Omani vehicle owners and fishermen. A further addition of RO 80 million was earmarked as ‘Transport Subsidy’ in the latest budget.

Furthermore, the Ministry of Finance pledged to maintain support in the form of housing aid, social housing schemes and housing loan assistance at the same level as in 2011. In 2021, as many as 1,247 households benefited from the social housing scheme towards which an expenditure of RO 29.631 million was incurred, the Ministry noted. “The amount allocated for such a scheme shall remain at the same level in 2022,” the Ministry said in its Budget Statement.

Significantly, subsidy allocations, bundled together with ‘Contributions and Other Expenses’, amounted to well over RO 1 billion for 2022, according to the Ministry. “The appropriations allocated for this budget-item are estimated at RO 1,071 million, including subsidies for electricity, water, sewage and waste sectors. In addition to subsidies for oil products, housing and development loans,” it said, adding that the budget-item accounted for a 9 per cent share of total budgeted expenditure of RO 12.130 billion for 2022.