Oman posts $2.4bn budget surplus for 2023 on oil and gas revenue boost

Sultanate expects financing needs of $5.7bn for 2024

Oman’s economy is estimated to grow by 1.3 per cent in 2023, according to the IMF. Silvia Razgova / The National

Oman posted a budget surplus of 931 million Omani rials ($2.4 billion) for the financial year 2023 as per preliminary data after a more-than-anticipated rise in public revenue due to higher oil and gas production and prices.

The surplus for the year compares with a deficit of around 1.3 billion rials that the country's budget earlier estimated, Oman News Agency reported on Monday, quoting the Ministry of Finance.

Public revenue in 2023 rose to 12.21 billion rials, up by roughly 2.16 billon rials compared to what was approved in the budget, while public spending reached 11.282 billion rials.

Net oil revenue is expected to have risen by 29 per cent to 6.88 billion rials while net gas revenue rose by an estimated 43 per cent to reach about 2 billion rials “as a result of the rise in gas production and prices”, ONA reported.

The government was also able to reduce the public debt by 2.4 billion rials to 15.2 billion rials, which led to saving 140 million rials from the cost of servicing the debt, the ministry said.

The Gulf nation, which is heavily dependent on hydrocarbons, launched a three-year fiscal stability programme in November 2022 to add momentum to its economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.

Oman’s economy is estimated to grow by 1.3 per cent in 2023, down from 4.3 per cent in 2022, due to Opec+ oil production cuts, the International Monetary Fund said in November.

However, growth is set to rebound in 2024, supported by higher hydrocarbon production and stronger non-hydrocarbon growth, the IMF said.

Brent, the global benchmark for two thirds of the world's oil, topped $95 a barrel in September as voluntary supply cuts by Opec+ members Saudi Arabia and Russia tightened the crude market.

However, despite geopolitical instability in the Middle East, rising exports from sanctioned countries as well as concerns about the global economy have dragged crude prices lower.

Crude prices posted their biggest annual drop since 2020, with Brent ending 2023 at $77.04 per barrel, down more than 10 per cent on a yearly basis.

In its 2024 budget, Oman expects net oil revenue of approximately 5.91 billion rials, and net gas revenue of around 1.57 billion rials, the ministry said.

Non-oil revenue is estimated to reach 520 million rials.

Total financing needs for the fiscal year will amount to 2.2 billion rials, in addition to loan instalments expected to be repaid during the 12-month period.

The 2024 budget aims to improve the business environment, expand the private sector’s participation in economic development, and support the society by empowering the Social Protection Fund and maintaining the level of spending in basic services such as education, health and housing, the ministry said.