Oman expects a budget deficit of 1.5 billion Omani riyals ($3.92 billion) in 2022, down 32 percent year on year, as state spending growth is outpaced by better income growth due to higher oil and gas receipts.
In 2022, total state income is expected to reach 10.58 billion riyals, up 6% over this year’s budget. Oil and gas revenue is expected to be about 7.19 billion riyals, or 68 percent of total revenues, up from 6.19 billion riyals in 2021, when it was 63 percent. Oman’s expected income projections are based on an oil price assumption of $50 per barrel, up from $45 per barrel in the budget for 2021.
Increasing oil prices and higher oil output, in keeping with the continuing Opec+ production restraint arrangement, have resulted in an increase in projected oil and gas profits. Since the middle of last year, Oman’s output has been progressively ramping up as the Opec+ group gradually recovers all of the oil it pulled off the market in May 2020 in reaction to the Covid-19-induced slump in world oil demand.
The deal’s quota on Oman has climbed to 804,000 b/d this month and is set to rise again next month, though the Opec+ group has left open the possibility of adjusting its policy before its next meeting on January 4 if necessary.
Non-oil revenue is expected to climb to roughly 3.39 billion riyals in 2022, up 10.6 percent from the 3.79 billion riyals forecasted in the sultanate’s budget for 2021. Oman’s goal of reducing its reliance on oil and gas income is being met thanks to continuing increase in non-oil revenues.
“One of the most important pillars of the state’s general budget for 2022 is maintaining safe and sustainable levels of public spending, while continuing to raise non-oil revenue contributions and prioritising the implementation of projects related to the productive sectors and others,” said Abdullah bin Salem al-Harthy of Oman’s finance ministry.
Meanwhile, government spending in 2022 will increase by 2% over 2021 predictions to $12.1 billion. According to Abdulsalam bin Muhammad al-Murshidi, head of Oman’s Investment Authority, actual investment expenditures account for around 24 percent of overall expenditures, or 2.9 billion riyals. In 2021-2022, a total of 110 investment projects will be implemented and developed, according to al-Murshidi. During Saudi Crown Prince Mohammed bin Salman’s visit to the Sultanate last week, a number of state-owned and private Omani enterprises inked a series of transactions for a total of $30 billion with Saudi Arabian corporations.
In its 2022 budget, Oman anticipates state debt to reach 75 percent of GDP, down from the 86 percent anticipated in this year’s budget.