Oman’s economy has recently recorded a budget surplus of OMR372 million at the end of 2023, which is an increase from the surplus of OMR210 million in the same period of 2022. This surplus is mainly attributed to an increase in oil and gas revenues, which represent 78 percent of total public revenue, and an increase of current revenue by 51 percent.
The rise in oil and gas revenue can be attributed to higher oil prices of $86 per barrel and an increase in oil production to 1,064,000 barrels per day. Furthermore, gas revenue increased by 2 percent compared to the same period in 2022. Current revenue increased by OMR160 million, amounting to OMR471 million compared to OMR311 million registered over the same period in 2022.
Debt repayment
Moreover, the government has repaid OMR1.1 billion against public debt in the first quarter of 2023, reducing the total government debt to OMR16.6 billion at the end of March 2023. This indicates that Oman’s economy is on a positive trajectory, with the government taking significant steps to manage its finances effectively.
The Medium Term Fiscal Plan 2021-2024 aims to reduce Oman’s fiscal breakeven oil price to $68 per barrel, increase non-hydrocarbon revenue, reduce public debt, improve Oman’s credit ratings, develop the social protection system, and restructure pension funds, among other direct and indirect results. These objectives are crucial for Oman’s economy as they will contribute to the stability and sustainability of the country’s finances.
Steps taken
One of the significant steps taken under the Medium Term Fiscal Plan is reducing the fiscal breakeven oil price. This measure is aimed at ensuring that the government’s expenses can be met, even if oil prices fall below a certain level. As oil prices are volatile and subject to fluctuations, reducing the fiscal breakeven oil price will help Oman’s economy remain stable, regardless of fluctuations in the global oil market.
Another critical objective of the Medium Term Fiscal Plan is increasing non-hydrocarbon revenue. This is essential as Oman is heavily reliant on oil and gas revenues, which make up a significant portion of the country’s GDP. By diversifying the economy and increasing non-hydrocarbon revenue, Oman’s economy can become more resilient to external shocks and more sustainable in the long term.
The Medium Term Fiscal Plan aims to reduce public debt, which is crucial for Oman’s long-term economic health. As the government reduces its debt burden, it can allocate more resources to other areas, such as social welfare and infrastructure development, which will drive economic growth.
Improved credit ratings
The plan also aims to improve Oman’s credit ratings, which will make it easier for the country to access financing in international markets. This will, in turn, allow the government to invest in critical areas such as education, healthcare, and infrastructure development, which will support economic growth.
Developing the social protection system is another key objective of the Medium Term Fiscal Plan. As Oman’s population grows and ages, there is an increasing need for social welfare programs to support vulnerable groups. Developing a comprehensive social protection system will help ensure that everyone in Oman has access to essential services and can live with dignity.
Restructuring of pension funds is another critical objective of the Medium Term Fiscal Plan. As Oman’s population ages, the cost of providing pension benefits will rise, placing a significant burden on the government’s finances. By restructuring pension funds, the government can manage these costs more effectively, ensuring that pension benefits remain sustainable in the long term.
