“Moody's”, the credit rating agency, expected that the budget of the Sultanate of Oman would achieve a fiscal surplus for the second year in a row. This is despite the Sultanate’s adoption of the fiscal budget for 2023, on January 1, with an expected deficit of 1.3 billion Omani riyals ($3.38 billion).
The agency's optimism is due to the high price of oil and gas, as it expects prices between 90-95 dollars per barrel of oil during the current year, while the government hedged the budget with the most pessimistic price estimates at around 55 dollars per barrel. This discrepancy represents a repeat scenario for last year's budget, as Moody's expectations at the time suggested a surplus of 1.146 billion riyals ($2.98 billion). Based on these estimates, Oman achieved its first fiscal surplus in about 10 years in 2022, amounting to $2.98 billion.
According to “Moody's” report, the increase in oil prices, supported by the financial reforms implemented over the past two years, enabled the Omani government to reduce the direct debt burden, to below the level of the pre-coronavirus era. In addition to benefiting from the strong positive impact on the debt-to-GDP ratio and the debt-to-revenue ratio, the Omani government used part of its 2022 surplus to draw down some of its outstanding debt early. In view of this, the government debt burden decreased to about 44 percent of GDP in 2022, supported by the rise in nominal GDP and the increase in revenues due to the rise in oil prices.
Source (Al-Arab Al-Jadeed Newspaper, Edited)
