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Resurgent oil prices averaging $57.4 per barrel during the first nine months of this year helped slash the Sultanate of Oman’s budget deficit to RO 1,030 million, representing an impressive 58 per cent decline compared to the corresponding figure of RO 2,448 million for the Jan - Sept period of 2020.
Figures released by the Ministry of Finance on Thursday point to a strongly positive trend in the trajectory of the country’s fiscal performance, aided not only by rising international oil prices but also by measures to rein in expenditures, roll back subsidies and boost the country’s non-oil revenue base.
“By the end of September 2021, public revenue increased by 22.6 per cent to RO 7,367.6 million as compared to RO 6,011.8 million registered in the same period of 2020,” the Ministry stated in its latest monthly bulletin on the country’s fiscal performance.
“Over the past months, Oman has witnessed some improvement in oil prices that averaged US$57.4 at the end of the 3rd quarter of 2021, which has raised net oil revenue to RO 3,908.5 million and gas revenue to RO 1,422.0 million,” it further noted.
Hydrocarbon exports remained the primary revenue earner for the country. While daily oil production slid slightly to an average of 957,000 barrels per day during the Jan – Sep 2021 period, down from 959,000 bpd during the corresponding period of 2020, average oil prices were significantly higher this year. It rose to an average of $57.4 per barrel this year, up from $49.1 per barrel for the period under review last year.
This uptick in oil prices translated into net oil revenue of RO 3,908.5 million this year, up from RO 3,0038.9 million for the corresponding period of 2020, representing a growth of 28.6 per cent. Likewise, gas revenues surged 38 per cent to RO 1,422 million this year, up from RO 1,030 million in 2020.
Also buoying public revenues during the first nine months of this year was a 45.2 per cent jump in current revenue to RO 2,004.1 million, up from RO 1,380.3 million for the corresponding period of 2020. Non-tax revenue amounted to about RO 1,034.1 million, which included RO 613.3 million of dividends was received from various government investments. Additionally, tax and fees revenue totalled RO 969.9 million, it stated.
Spending for the period was also kept in check, the Ministry of Finance noted in its bulletin. Total expenditure amounted to RO 8,397.6 million this year, which was marginally lower by 0.74 per cent compared to last year’s tally of RO 8,460.1 million.
Also easing the fiscal burden on the government this year was the creation of Energy Development Oman (EDO) with the mandate to independently raise the financing requirements of Block 6 licensed to Petroleum Development Oman (PDO), the country’s largest producer of hydrocarbons.
“As of September 2021, Energy Development Oman (EDO) became fully operational and thus all government obligations related to the oil and gas production expenditure has been transferred to EDO,” said the Ministry. In August, EDO announced that it had successfully secured a $2.5 billion debut financing transaction involving the participation of a number of local, regional and international banks.
The Ministry’s bulletin also referred to the positive assessments of a number of credit rating agencies that had revised Oman’s economic outlook. “Moody’s has revised the outlook on Oman’s credit rating to stable from negative and affirmed its rating at Ba3. According to Moody’s, the change in outlook reflects the significant easing of government liquidity and external financing pressures, mainly as a result of the ongoing implementation of the Medium-Term Fiscal Plan and significantly higher oil prices since the middle of 2020, which will underpin a steady decline in the direct government debt burden to around 60 per cent of GDP by 2024,” it noted.
The Medium Term Fiscal Plan targets, among other things, a reduction in Oman’s public debt from 80 per cent in 2020 to 60 per cent by 2024, a decline in the government’s gross financing need per annum from 22 per cent in 2020 to 10 per cent during 2021 – 23, and a decline in Oman’s current account deficit from 13 per cent in 2020 to 4 per cent during 2021 – 23.
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