MUSCAT, MAY 13
Oman’s overall public revenue for Q1 2024 witnessed a 12% decrease to RO 2.826 billion, down from RO 3.217 billion for the same period in 2023, the Ministry of Finance revealed in a report of Oman’s fiscal performance for the first quarter of this year.
It attributed the decline primarily to a 38% reduction in net gas revenue to RO 444 million in Q1 2024, down from RO 720 million a year earlier. Net oil revenue also dipped 1% to RO 1.688 billion, down from RO 1.707 billion in Q1 2023. Current revenue, encompassing income sources beyond oil and gas, also experienced a 12% decrease to RO 691 million, down from RO 787 million a year earlier.
Contributing factors include lower oil prices, which edged down 2% to $83/barrel in Q1 2024, down from $85/barrel a year ago. Average oil production also slid 5% to 1.014 million barrels/day, down from 1.063 million barrels/day in Q1 2023.
While overall public spending witnessed a 4% decrease compared to Q1 2023, there was a notable 71% increase in development expenditure. At the end of Q1 2024, the current expenditure of civil ministries amounted to RO 1.978 billion, down by RO 49 million compared to RO 2.027 billion registered over the same period in 2023. Development expenditure of ministries and government units amounted to RO 200 million, representing 22% of total development spending, i.e. RO 900 million, allocated for 2024. Total contributions and other expenses for the quarter amounted to RO 486 million, up by 78% compared to RO 273 million registered over the same period in 2023.
“This is mainly due to the application of social protection system, alongside oil products subsidy which amounted to RO 140 million and RO 72 million, respectively, by the end of Q1 2024. Furthermore, an amount of RO 100 million was transferred to future debt obligations budget-item,” the Ministry stated.
Despite the decline in revenue, Oman achieved a significant milestone by reducing its total public debt by RO 188 million compared to Q1 2023. This accomplishment reflects the government's commitment to effective financial management.
The Ministry of Finance outlined several strategies employed for debt reduction, such as repurchasing bonds at a discount and refinancing high-interest loans with lower-cost alternatives. These measures are crucial for Oman's long-term fiscal health, as they lessen the burden of interest payments and liberate resources for essential government services and investments.
This suggests a strategic shift in prioritization, with a focus on investments that foster long-term economic growth and potentially benefit Oman's future economic diversification efforts.
The Ministry of Finance reports a positive development in Oman's credit rating outlook. S&P Global Ratings upgraded its outlook on Oman's creditworthiness from "stable" to "positive" in recognition of the government's progress in managing debt. This improved rating could potentially lead to lower borrowing costs for Oman in the future.
Significantly, despite low oil prices and the impact of the COVID-19 pandemic on the economy, Oman has managed to reduce public debt to 36.5% in 2023. The public debt stands at RO 15.1 billion by the end of Q1 2024 on account of ongoing efforts to reduce public debt by utilizing surplus revenues.
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