Oman back in deficit, beats budget target: CBO

MUSCAT, SEPTEMBER 9
MUSCAT: Oman recorded a fiscal deficit of RO 461 million in 2025, its first shortfall in four years, as a fall in oil prices dragged hydrocarbon receipts down by 8.6 per cent. The gap nonetheless came in a quarter below the RO 620 million the government had budgeted for, according to the Central Bank of Oman's (CBO) annual report for 2025.
The outcome ends three consecutive years of surplus, which reached RO 1.14 billion in 2022 before narrowing to RO 540 million in 2024. Measured against the size of the economy, the 2025 deficit was equivalent to 1.1 per cent of GDP.
Because revenues outperformed, the government did not draw on financial reserves at any point during the year, despite a budgeted drawdown of RO 400 million — leaving fiscal buffers intact. Public debt was broadly unchanged at RO 14.59 billion but fell as a share of the economy to 34.6 per cent of GDP from 35.4 per cent a year earlier. The debt service ratio eased to 9.6 per cent from 9.8 per cent.
The report links that trajectory to two ratings actions during the year, with Moody's raising Oman to Baa3 and Fitch to BBB−, restoring investment grade at both agencies.
Revenues down, but above budget
Total government revenue reached RO 12.12 billion, down 5.2 per cent in 2024 but 8.4 per cent above the budgeted RO 11.18 billion.
Hydrocarbon revenues of RO 8.48 billion accounted for 70 per cent of the total. Net oil revenues fell 10.9 per cent year on year to RO 6.64 billion yet still exceeded the budget estimate by 13.9 per cent because realised prices ran above the conservative assumption of $60 per barrel used to build the budget. Gas revenues edged up 1.0 per cent to RO 1.84 billion, 3.6 per cent above budget.
Non-hydrocarbon revenues rose 3.8 per cent to RO 3.64 billion, lifting their share of total revenues to around 30 per cent from 27.4 per cent in 2024. Non-oil economic activity grew 3.1 per cent at constant prices over the year.
Taxes and fees, the largest non-hydrocarbon component, edged up 1.4 per cent to RO 2.11 billion. Value-added tax collections rose 6.7 per cent to RO 630.6 million and customs duties 10.9 per cent to RO 261.1 million, while hotel and facility fees jumped 25.2 per cent to RO 38.7 million. Those gains offset weaker corporate income tax, down 3.2 per cent to RO 656.5 million, excise tax, down 10.0 per cent, and expatriate labour recruitment fees, down 4.4 per cent.
Non-tax revenue grew 7.2 per cent to RO 1.50 billion, reversing a 3.8 per cent decline the previous year, helped by higher miscellaneous receipts and stronger airport, port and mining revenues. Dividends from government investments were flat at RO 805.3 million.
Development spending overshoots
Government expenditure rose 2.8 per cent to RO 12.58 billion, overshooting the approved budget by 6.6 per cent. The deviation was driven almost entirely by capital spending: investment expenditure reached RO 1.58 billion, up 5.3 per cent and 75.2 per cent above the RO 900 million allocation, as civil ministries accelerated project execution.
Current spending, at 69.3 per cent of the total, grew 2.2 per cent to RO 8.73 billion. Civil ministries spent RO 4.78 billion, up 3.7 per cent and 4.6 per cent above budget, while defence and national security rose 2.6 per cent to RO 3.07 billion, effectively in line with the allocation. Debt service costs fell 6.0 per cent to RO 880 million. Contributions and other expenses rose 3.2 per cent to RO 2.28 billion, 2.8 per cent below budget.
The 2025 outcome sets the baseline for the first budget of the 11th Five-Year Development Plan (2026–2030), which projects a deficit of RO 530 million, or 1.3 per cent of GDP, on revenues of RO 11.45 billion and spending of RO 11.98 billion. The oil price assumption remains $60 per barrel for a third year, with RO 400 million of the financing again earmarked from reserves and investment expenditure rising 44.4 per cent to RO 1.30 billion.
The Central Bank's own model is more favourable. Assuming an average price of $81 per barrel and production of 1.05 million barrels per day, it projects a fiscal surplus of 2.5 per cent of GDP in 2026, narrowing to 0.6 per cent in 2027, with public debt falling to 27.8 per cent of GDP by 2030.