Oman has approved its annual budget for 2022, which allocates 12.13 billion Omani riyals ($ 31.5bn) for spending, with a focus on basic public services, from health to social support, which stimulates investment.
This year’s budget, which is an increase over last year’s budget of 12.167bn riyals, is based on the assumption of an oil price of $ 50 per barrel, the state-run Oman News Agency (ONA) reported on Sunday.
The government expects its revenue to reach 10.58bn riyals by 2022, with more than half (68 per cent) coming from oil and gas revenue of 7.24bn riyals, the ONA reported. Non -oil revenue is estimated at 3.34bn riyals, or 32 per cent of total government revenue.
Oman’s budget deficit in 2022 is expected to reach an estimated 1.5bn riyals, or 5 per cent of gross domestic product, with an estimated deficit in line with the country’s medium-term financial plan, launched by the Gulf state last year to fix its finances.
The sultanate would finance its budget deficit from external and local borrowing, as well as plugging in the remaining space by drawing on its reserves.
“The draft budget for 2022 has been prepared in accordance with the objectives and pillars of the 10th Five-Year Plan from 2021 to 2025,” Sultan bin Salem Al Habsi, Oman’s finance minister, told ONA. “This represents the first phase within Oman Vision 2040 that aims to achieve financial sustainability and stimulate economic diversity.”
Oman’s budget deficit will reach an estimated 1.2bn riyals in 2021, or 3.8 per cent of GDP.
“Preliminary data indicates that the overall state budget for 2021 is towards achieving the lowest annual deficit since 2014, despite fluctuations in oil prices in recent periods,” said Mr Al Habsi, who cites government efforts to boost the confidence of lenders and credit rating agencies.
In a preliminary budget report for 2022 on December 30, the Ministry of Finance of Oman said that spending priorities were on key services such as education, health, housing and social care, improving the business environment and attracting more investment.
Oman, a relatively small crude producer compared to its Gulf neighbors, is more sensitive to changes in oil prices. However, higher oil prices in 2021, along with fiscal reforms, are expected to narrow government deficits and contain debt levels over the next few years.
Last month, Fitch Ratings changed Oman’s outlook to be stable from negative following improvements in key fiscal metrics, including government debt, GDP and the budget deficit.
The agency also adopted the long -term foreign and local currency Issuer Default Ratings (IDR) at BB minus. BB ratings indicate a high vulnerability to default risk, especially in the event of adverse changes in business or economic conditions over time, with financial flexibility.
The change in Oman’s outlook has been driven by higher oil prices and fiscal reforms in the country and reduced external financing pressures in relation to recent years, even as demand for external funding remains high, he said. Fitch.
Oman has adopted various fiscal measures over the past year to support the economy during the pandemic, including interest-free emergency loans, tax and fee cuts and waivers, flexibility to pay taxes in installments and a Job Security Fund to support citizens who have lost their jobs.
Oman’s economy is set to recover in 2021 from the dual effects of the Covid-19 pandemic and the fall in oil prices in 2020, where the economy is expected to grow by 2.5 percent after a 2.8 percent recession in 2020, according to International Monetary Fund.
Updated: January 2, 2022, 2:23 PM