The 2011 budget projects a 14% year-on-year rise in revenue to OR7.3bn and a 13% increase in expenditure to OR8.1bn, implying a budget deficit of OR850m. However, we expect spending to rise more sharply, to OR8.5bn, as the government increases subsidies, unemployment benefits and other handouts in an attempt to prevent more protests. The government has announced a raft of measures aimed at increasing the salaries of Omanis in the public sector as well as a rise in subsidies for basic food products. It is probable that the government will announce some sort of pay package for Omanis in the private sector as well, but this will hit profitability. We have increased our forecast for oil prices in 2011 to an average of US$101/b, since prices are likely to rise as risk premiums in the oil market widen on the fear that protests might spread to other oil-exporting countries in the region. We estimate that government revenue increased by 18% year on year, to OR8bn, in 2010 as a result of increases in oil production and oil prices. We have revised up further our forecast for revenue in 2011 to OR9bn as a result of the revision to our oil price forecast. We expect the budget surplus to widen to 2.1% of GDP in 2011. Increased expenditure in 2012 will lead to a narrowing of the surplus, to 0.7% of GDP.