Oman's government plans to cut its budget deficit to RO3.3 billion ($8.6 billion) this year from an actual RO4.5 billion ($11.6 billion) last year, partly through big spending cuts, Financial Affairs Minister Darwish al-Balushi said on Friday.

Oman, a small oil exporter, has been hit hard by low oil prices. The government originally projected a deficit of RO2.5 billion for last year, assuming an average oil price of $75 per barrel, but Brent crude is now below $40.

In a statement to official news agency ONA, Balushi estimated state spending this year at RO11.9 billion, a big drop from last year's original budget of RO14.1 billion, and revenues at RO8.6 billion.

He did not specify how the 2016 deficit would be financed, but said the ministry would issue a detailed statement on the budget at a later date.

The government has been stepping up local-currency bond issues and has been seeking a $1 billion syndicated loan. Officials have said Oman may also issue its first international bonds since 1997.

Earlier this week, Oman's cabinet approved in principle spending cuts, tax rises and fuel subsidy reforms to save money, but did not release detailed numbers.

Salim Al Aufi, undersecretary at the Ministry of Oil and Gas, was quoted by the al-Shabiba newspaper as saying domestic gasoline prices would rise by no more than a third to a maximum of 42 U.S. cents a litre under the reforms - remaining among the lowest in the world.-Reuters