Oil and gas revenues are expected to amount to OMR 7.24 billion.
Muscat: Oman’s total public expenditure under the 2022 budget is estimated at around OMR 12.13 billion, a 2% increase over the estimated budget for 2021.
This includes the cost of servicing the public debt, which amounts to OMR 1.3 billion. The budget also estimates that oil prices will remain at around $ 50 a barrel, resulting in estimated revenue collection of OMR 10.58 billion, a 6 percent increase in revenue from 2021.
Oil and gas revenues are expected to be OMR 7.24 billion (68% of incoming revenues), with the remainder coming from non-oil revenue sources. Oman plans to finance the estimated budget deficit (about OMR 1.5 billion) by drawing about OMR 400 million from reserves and financing the remainder through external and internal borrowing.
“Preliminary data indicates that the general state budget for 2021 is heading towards achieving the lowest annual deficit since 2014, despite the fluctuation in oil prices in previous periods, thanks to the efforts made by the government to through its medium-term commitment. The financial plan, in terms of revenue and expenditure, aims to achieve its main objectives of increasing the confidence of lenders and credit rating institutions, ”Sultan bin Salem Al Habsi, Minister of Finance, told the agency. Oman press release.
“The draft budget for this year has been prepared in accordance with the objectives and pillars of the tenth five-year plan 2021-2025,” Al Habsi added. “This represents the first efforts under Oman Vision 2040 and aims to achieve financial sustainability and boost economic diversification. “
The budget takes into account the need to maintain spending levels in basic services such as education, health, housing and social services, which are among the most important considerations when it comes to preparing estimates related to public expenditure. In addition, it also incorporates the measures necessary to improve the business environment and expand partnership projects with the private sector.
The minister explained, “If oil prices exceed the price approved in the budget, the priority will be to harness the additional yields to reduce the deficit and pay off loan maturities.
Oman plans to increase its oil production this year to more than one million barrels per day. The finance ministry explained that the country has a number of economic and social goals that it wants to achieve this year, including maintaining safe and sustainable levels of public spending, continuing to increase the contribution of non-oil revenue and giving the priority for projects linked to productive sectors.
Other important goals include the digital transformation agenda, maintaining spending levels for basic services, redirecting support to required segments of society, and continuing efforts to improve the Sultanate’s credit rating.
The budget also takes into account the need to support training and rehabilitation, create new employment opportunities and provide assistance to small and medium-sized enterprises in the country.
In 2021, the major credit rating agencies published their assessment reports on the credit rating of Oman. Standard & Poor’s, in its report published in October 2021, revised Oman’s outlook from stable to positive and confirmed its rating at B +. This positive outlook is attributed to strong policy responses to economic and health challenges and to actions taken under the Medium Term Budget Plan.
Plan (MTFP) towards fiscal sustainability. This is in addition to a recovery in oil prices and a decline in the consequences of the COVID-19 pandemic, which would reduce government deficits and limit the increase in net public debt over the next three years.
Standard & Poor’s also said that Oman’s ratings could be upgraded over the next year if fiscal measures and stronger economic growth lead to improved fiscal performance and a reduction in net public debt.
Moody’s changed the outlook for Oman’s credit rating from negative to stable and confirmed its rating at Ba3. According to Moody’s, the change in outlook reflects the significant easing of government liquidity and pressures on external financing, mainly due to the ongoing implementation of the medium-term fiscal plan and significantly higher oil prices since. mid-2020, which will support a drop in the direct public debt burden to around 60% of GDP by 2024.
-With ONA inputs