State Budget reports surplus of RO656 million in H1, 2023
Published: 09:08 AM,Aug 13,2023 | EDITED : 01:08 PM,Aug 13,2023
Muscat: The state's general budget recorded a financial surplus of RO656 million at the end of the First Half of 2023, compared to RO784 million reported during the same period of 2022.
At the end of H1 2023, Oman's public revenue amounted to RO 6,342 million, down by 6% when compared to an amount of RO 6,725 million registered over the same period in 2022.
The average oil price amounted to US$ 83 a barrel while average oil production reached 1,061 thousand barrels per day.
Net Gas Revenue At the end of H1 2023, net gas revenue amounted to RO1,115 million, down by 36% when compared to RO 1,729 million registered over the same period in 2022.
This is due to the deduction of gas purchase and transport expenses from the total revenue collected from Integrated Gas Company.
The following are the most important items of public revenue:
Hydrocarbon Revenue
By the end of H1 2023, current revenue registered RO 1,962 million, up by 9% when compared to an amount of RO 1,796 million collected over the same period in 2022.
Public Spending Surplus/Deficit
By the end of H1 2023, public spending amounted to RO 5,686 million, down by RO 255 million, i.e. 4% compared to actual spending over the same period in 2022. The following are the most important items of public spending:
Current Expenditure
At the end of H1 2023, current expenditure amounted to RO 4,078 million, down by RO 472 million, i.e. 10% when compared to an amount of RO 4,550 million registered over the same period in 2022.
By the end of H1 2023, the total of contributions and other expenses amounted to RO 775 million, down by 10% when compared to an amount of RO 863 million registered over the same period in 2022.
The oil product subsidy and transport sector subsidy amounted to RO 155 million and RO 54 million, respectively. Furthermore, an amount of RO 200 million was transferred to future debt obligations budget-item.
By the end of H1 2023, the Ministry of Finance repaid more than RO 507 million to the private sector. This reflects the payment vouchers received through the e-financial system, which has completed the documentary cycle.
By the end of H1 2023, the Ministry of Finance repaid more than RO 1.5 billion against public debt, reducing the total public debt to RO 16.3 billion
By the end of H1 2023, the Ministry of Finance did not withdraw from reserves as planned, as a result of generating additional revenue
Oman’s general budget registered deficits as a result of the oil price collapse in 2014, forcing Oman to finance these deficits by borrowing from local and external institutions.
This has led to an increase in public debt to 67.9% of GDP in 2020, Therefore, there was an urgent need to adopt prudential fiscal policies with the aim to reduce public debt and achieve fiscal balance so as to absorb any potential financial shocks and global changes.
Within this regard, the Ministry of Finance set out public debt management strategy and conducted a study to identify the safe debt limit. Oman’s public debt increased to 29.1% of GDP in 2016 from 4.9% of GDP in 2014 and peaked at 67.9% of GDP in 2020.
Despite oil prices remaining low and the impact of the COVID-19 pandemic on the economy, Oman has succeeded in reducing public debt to 40% in 2022.
The public debt stands at RO 16.3 billion by the end of June 2023
In recent years, the Sultanate of Oman succeeded in bringing public debt down and reducing the cost of debt servicing and thus minimizing the risks of the debt portfolio.
This is due to the implementation of several measures and initiatives that led to rationalizing public spending and increasing public revenue. Additionally, high oil prices and utilizing part of additional revenue to repay Government loans.
Also, the liability management exercise helped to reduce public debt, through:
Buy back some sovereign bonds for less than their nominal value.
Prepayment of high-cost loans.
Issuance of government Sukuk in Muscat Stock Exchange at a preferable rate.
These estimates are set according to simulation studies conducted by the Micro Fiscal Unit in the Ministry of Finance
According to studies and risk analysis conducted by the Micro Fiscal Unit (MFU) in the Ministry of Finance, Oman’s safe debt limit is estimated at 30% of GDP, enabling the Government to meet debt obligations and sustain the levels of economic growth. The following benchmark illustrates the safe debt limit and Oman’s public debt position.
According to International Monetary Fund (IMF), global growth is projected to fall from an estimated 3.5% in 2022 to 3% in both 2023 and 2024 on an annual average basis. Compared with projections in the April 2023 World Economic Outlook (April 2023 WEO), growth has been upgraded by 0.2 percentage points, with no change for 2024.
The slowdown is concentrated in advanced economies, where growth will fall from 2.7% in 2022 to 1.5% in 2023 and remain subdued at 1.4% in 2024. By contrast, growth in emerging markets and developing economies is still expected to pick up with year-on-year growth accelerating from 3.1% in 2022 to 4.1% in both 2023 and 2024.
Global inflation is projected to decline from 8.7% last year to 6.8% this year, a 0.2 percentage point downward revision, and 5.2 percent in 2024. According to the Short-Term Energy Outlook issued by the U.S. Energy Information Administration (EIA) in July 2023, the Brent crude oil spot price is expected to average US$ 78 per barrel (b) in July, Crude oil prices gradually increase throughout the EIA’s forecast, reaching about US$ 80/b in the fourth quarter of 2023 and averaging about US$ 84/b in 2024.
Global Economy According to the Analysis of the “Economic Situation in the Sultanate of Oman for the First Quarter 2023” report issued by the National Center for Statistics and Information (NCSI) in July 2023, the total local liquidity amounted to RO 21.1 billion by the end of Q1 2023, up by 2.4% when compared to the same period in 2022.
At the end of H1 2023, Oman's public revenue amounted to RO 6,342 million, down by 6% when compared to an amount of RO 6,725 million registered over the same period in 2022.
The average oil price amounted to US$ 83 a barrel while average oil production reached 1,061 thousand barrels per day.
Net Gas Revenue At the end of H1 2023, net gas revenue amounted to RO1,115 million, down by 36% when compared to RO 1,729 million registered over the same period in 2022.
This is due to the deduction of gas purchase and transport expenses from the total revenue collected from Integrated Gas Company.
The following are the most important items of public revenue:
Hydrocarbon Revenue
By the end of H1 2023, current revenue registered RO 1,962 million, up by 9% when compared to an amount of RO 1,796 million collected over the same period in 2022.
Public Spending Surplus/Deficit
By the end of H1 2023, public spending amounted to RO 5,686 million, down by RO 255 million, i.e. 4% compared to actual spending over the same period in 2022. The following are the most important items of public spending:
Current Expenditure
At the end of H1 2023, current expenditure amounted to RO 4,078 million, down by RO 472 million, i.e. 10% when compared to an amount of RO 4,550 million registered over the same period in 2022.
By the end of H1 2023, the total of contributions and other expenses amounted to RO 775 million, down by 10% when compared to an amount of RO 863 million registered over the same period in 2022.
The oil product subsidy and transport sector subsidy amounted to RO 155 million and RO 54 million, respectively. Furthermore, an amount of RO 200 million was transferred to future debt obligations budget-item.
By the end of H1 2023, the Ministry of Finance repaid more than RO 507 million to the private sector. This reflects the payment vouchers received through the e-financial system, which has completed the documentary cycle.
By the end of H1 2023, the Ministry of Finance repaid more than RO 1.5 billion against public debt, reducing the total public debt to RO 16.3 billion
By the end of H1 2023, the Ministry of Finance did not withdraw from reserves as planned, as a result of generating additional revenue
Oman’s general budget registered deficits as a result of the oil price collapse in 2014, forcing Oman to finance these deficits by borrowing from local and external institutions.
This has led to an increase in public debt to 67.9% of GDP in 2020, Therefore, there was an urgent need to adopt prudential fiscal policies with the aim to reduce public debt and achieve fiscal balance so as to absorb any potential financial shocks and global changes.
Within this regard, the Ministry of Finance set out public debt management strategy and conducted a study to identify the safe debt limit. Oman’s public debt increased to 29.1% of GDP in 2016 from 4.9% of GDP in 2014 and peaked at 67.9% of GDP in 2020.
Despite oil prices remaining low and the impact of the COVID-19 pandemic on the economy, Oman has succeeded in reducing public debt to 40% in 2022.
The public debt stands at RO 16.3 billion by the end of June 2023
In recent years, the Sultanate of Oman succeeded in bringing public debt down and reducing the cost of debt servicing and thus minimizing the risks of the debt portfolio.
This is due to the implementation of several measures and initiatives that led to rationalizing public spending and increasing public revenue. Additionally, high oil prices and utilizing part of additional revenue to repay Government loans.
Also, the liability management exercise helped to reduce public debt, through:
Buy back some sovereign bonds for less than their nominal value.
Prepayment of high-cost loans.
Issuance of government Sukuk in Muscat Stock Exchange at a preferable rate.
These estimates are set according to simulation studies conducted by the Micro Fiscal Unit in the Ministry of Finance
According to studies and risk analysis conducted by the Micro Fiscal Unit (MFU) in the Ministry of Finance, Oman’s safe debt limit is estimated at 30% of GDP, enabling the Government to meet debt obligations and sustain the levels of economic growth. The following benchmark illustrates the safe debt limit and Oman’s public debt position.
According to International Monetary Fund (IMF), global growth is projected to fall from an estimated 3.5% in 2022 to 3% in both 2023 and 2024 on an annual average basis. Compared with projections in the April 2023 World Economic Outlook (April 2023 WEO), growth has been upgraded by 0.2 percentage points, with no change for 2024.
The slowdown is concentrated in advanced economies, where growth will fall from 2.7% in 2022 to 1.5% in 2023 and remain subdued at 1.4% in 2024. By contrast, growth in emerging markets and developing economies is still expected to pick up with year-on-year growth accelerating from 3.1% in 2022 to 4.1% in both 2023 and 2024.
Global inflation is projected to decline from 8.7% last year to 6.8% this year, a 0.2 percentage point downward revision, and 5.2 percent in 2024. According to the Short-Term Energy Outlook issued by the U.S. Energy Information Administration (EIA) in July 2023, the Brent crude oil spot price is expected to average US$ 78 per barrel (b) in July, Crude oil prices gradually increase throughout the EIA’s forecast, reaching about US$ 80/b in the fourth quarter of 2023 and averaging about US$ 84/b in 2024.
Global Economy According to the Analysis of the “Economic Situation in the Sultanate of Oman for the First Quarter 2023” report issued by the National Center for Statistics and Information (NCSI) in July 2023, the total local liquidity amounted to RO 21.1 billion by the end of Q1 2023, up by 2.4% when compared to the same period in 2022.