Oman boosted capital expenditure by 22.6 per cent in the first nine months of 2009 as it appears encouraged by surging crude prices to step up spending as part of its anti-crisis measures, official figures showed.

From around RO1.4 billion (Dh13.6bn) in the first nine months of 2008, actual capital spending surged to RO1.7 million in the first nine months of 2009, the Omani Ministry of National Economy said.

Oil production expenditure swelled by around 20.1 per cent from RO456.2m to RO547.9m while there was an increase of about 35 per cent in civil ministries development spending and a fall of 14 per cent in civil ministries capital expenditure.

The surge in hydrocarbon spending was in line with Oman's ongoing programme to raise its crude output to meet budget targets for 2009.

The ministry's monthly bulletin showed the Gulf country's actual oil production surged to nearly 806,000 barrels per day in the first nine months of 2009 from around 750,000 bpd in the first nine months of 2008. The report showed current spending remained almost unchanged at around RO2.8bn in the first nine months of 2009.

The increase in development expenditure boosted Oman's total budget spending by around 2.8 per cent to RO4.8bn in the first nine months of this year from RO4.7bn in the same period of 2008.

Revenues fell by about 22.2 per cent to RO4.8bn from RO6.2bn in the same period. The decline was a mainly a result of a 29 per cent drop in crude oil export earnings to RO3bn from around RO4.3bn.

There was also a decline of around 13.4 per cent in gas income, 27.4 per cent in tax revenues and 10.3 per cent in other revenues while there was a sharp growth of around 56 per cent in corporate income tax.

The report showed lower earnings turned Oman's massive budget surplus of RO1.4bn in the first nine moths of 2008 into a deficit of around RO34.8m in the first nine months of 2009.

It also showed the plunge in the oil sector depressed Oman's gross domestic product in the first half of this year by around 25 per cent to RO8.1bn from RO10.9bn in the first half of 2008.

Most of the fall was in the oil and gas sectors, which slumped by nearly 47.4 and 13 per cent respectively. Non-oil sectors dropped by around 5.9 per cent.

Like other nearby Gulf oil producers, Oman approved a record budget for 2009 in a bid to cushion the downward pressure of the global crisis on its economy.

Releasing the budget early this year, the government said it was based on an average price of Omani crude of 45 a barrel and production of 790,000 bpd.

The 2009 spending was forecast at a record RO6.4bn compared with a budgeted expenditure of RO5.8bn in 2008.

Revenues were also estimated higher at RO5.6bn in 2009 compared with RO5.4bn in 2008.

The increase in spending nearly doubled the forecast budget deficit to RO810m from RO410m in 2008.

Analysts believe Oman could either reduce its budget shortfall or record a tiny surplus by the end of 2009 because of the improvement in oil prices. In 2007, Oman approved a $10bn (Dh36.7bn) plan to develop its oil and gas resources.

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