Oman posted a budget surplus of OMR357 million ($927 million) in the first three months of the year as oil revenues increased, promising to raise expenditure on priority development projects and pay down debt.
Revenues increased by more than 66% to roughly OMR3 billion ($7.79 billion) in the third quarter, compared to OMR1.8 billion a year ago, while total spending was OMR2.7 million, according to the Finance Ministry. During the same period last year, Oman had a deficit of OMR751 million.
According to the International Monetary Fund, Oman will require oil prices of $73 per barrel this year to balance its books. The small Gulf nation has been undertaking a series of changes to close a budget gap and reduce debt, including a 5% value-added tax introduced last year.
According to the Finance Ministry, the economy would grow by 5.6 percent in 2022, as predicted by the IMF. Gulf oil producers have benefited from the sharp rise in oil prices, which surged past $100 a barrel after Russia’s invasion of Ukraine in late February exacerbated concerns about disruptions to the global energy supply.
The surplus would be spent on measures to support economic recovery, development projects, and lowering the debt ratio, the document said.
“We still see the GCC realizing fiscal surpluses in 2023, including Oman and Bahrain, supported by the oil price and tight global energy fundamental,” Monica Malik, chief economist at Abu Dhabi Commercial Bank, said. The fact that Oman is looking to reduce its debt levels is positive for strengthening fiscal fundamentals.
The Gulf Cooperation Council or GCC is a six-member body including Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Oman, and Kuwait. The ministry said net oil revenue was 1.565 billion rials at the end of the first quarter, up by 70.2% from the same period a year earlier. Oman also recorded a more than doubling of gas revenue in the first quarter, the data showed. The document cited the World Bank’s predictions that Oman’s economy will grow by 5.6% in 2022, supported by the expansion of more than 8% and 2% in oil and non-oil sectors, respectively.
