MUSCAT, Jan 4: Oman’s economy minister confirmed on Saturday the country had set a $7.8 billion budget for 2003 carrying a deficit of 400 million rials, and said he expected a lower actual 2002 gap of 100 million rials.

Economy Minister Ahmad bin Abdul-Nabi Mekki also told a news conference he expected gross domestic product (GDP) growth of 2.0 per cent for 2002 and of 1.0 per cent for 2003.

Last Wednesday, Sultan Qaboos bin Said approved the 2003 budget and a finance ministry official told Reuters it projected revenues of 2.6 billion rials and was based on an average oil price of $20 a barrel, up from $18 a barrel forecast in the 2002 budget.

Mekki said the 2003 budget forecast non-oil revenues of 764 million rials but gave no exact figure for oil revenues.

The minister said that due to production difficulties, the independent oil producer was expected to pump 763,000 barrels per day of crude oil in 2003 instead of a forecast 909,000 bpd.

As a result of the drop, Oman will lose some 403 million rials of revenues this year, he said.

The Gulf Arab state had set a 2002 budget projecting expenditure of 2.87 billion rials and revenue of 2.49 billion rials — for a gap of 380 million rials.

I expect the deficit in 2002 to be around 100 million rials, Mekki said.

The deficit of 2003 will be financed by borrowing 300 million rials and the rest will come from the reserves, he added. The minister put state debt at 1.2 billion rials, down from 1.5 billion owed to local and international financiers in 2002.

Oman relies heavily on proceeds from crude sales to finance state spending.

Officials said last month that mature oil fields were beginning to run out of crude oil and that Oman would invest about $1.5 billion a year on technology starting from 2003 to reverse the decline.

The sultanate is also trying to diversify its income away from oil by attracting foreign investment.

We are stepping up our efforts to privatise state-run companies in order to reduce reliance on oil revenues, Mekki said, adding that, in 2003, the government would privatise Oman Cement Co, Oman Flour Mills and a number of existing power plants.

Oman has privatised its two main airports and is in the process of partially privatising its telecommunications sector.

The 2003 budget allocated 40 per cent of total state spending, or 1.19 billion rials, to civil ministries. Defence and security have been allocated 938 million rials compared to 871 million rials in the 2002 budget.—Reuters