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The Sultanate of Oman Budget 2022 is all set to take off on January 1, 2022 amidst a vote of confidence in economy by global rating agencies following improvements in debt-to-GDP ratio and the size of the budget deficit.
The budget, which comes in the second year of the Tenth Five-Year Development Plan, paves the way to implement Oman Vision 2040 development objectives.
Higher oil prices in 2021, along with fiscal reforms, are expected to narrow state deficits and slow a rise in debt levels over the next few years.
As per the announcement by Sultan bin Salim al Habsi, Minister of Finance, the budget deficit is expected to reach 5 per cent of gross domestic product (GDP) in 2022, well within the limits of the Medium Term Fiscal Plan and considered to be the lowest since 2014.
“The budget aims to achieve a number of economic and social goals, among them maintaining safe levels of government spending, giving priority to projects of economic and social objectives and finalizing digital transformation, to name a few,” he said at a recent press conference.
Calculated on the basis of a breakeven oil price of $50 a barrel, revenues are estimated at RO 10.58 billion, 6 per cent higher than revenues expected by the end of the current year. Oil and gas returns comprise 68 per cent of the total revenues, against 32 per cent for non-oil and gas revenues.
Deficit in 2022 is estimated to stand at RO 1.5 billion and the cost of repayment of government loans in 2022 is expected to stand at RO 2.7 billion. The total public debt is expected to reach 75 per cent of GDP, which is less than the 86 per cent expected earlier in the year.
Abdullah bin Salim al Harthy, Undersecretary of the Ministry of Finance, during a press conference in the second week of this month expressed optimism that the Sultanate of Oman’s credit ratings will gradually improve over the coming years.
Three major global rating agencies including Fitch, Moody’s and S&P Global Ratings have revised their outlooks on Oman upwards.
The budget sets a prudent and measured tone in both its revenue and expenditure projections”, says Jose Chacko, Partner, Crowe Oman.
“The Budget 2022 has been prepared in accordance with the priorities in Oman Vision 2040 and objectives to achieve fiscal sustainability. It has measures to reduce the ratio of the size of public debt to GDP,” he said.
According to him, the level of economic growth in the budget will contribute to the employment of Omani nationals, and continue to enhance the role of private sector institutions in the development process.
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