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Oman’s nominal GDP to top RO 45 bn in 2022

KEY PERFORMANCE INDICATORS: Inflation averaged 2.06 per cent at the end of September 2022, compared to the global inflation rate of 8.8 per cent in 2022
Oman fiscal deficit and surplus. 
Courtesy: KPMG Oman
Oman fiscal deficit and surplus. Courtesy: KPMG Oman

MUSCAT: Oman’s gross domestic product (GDP) at current prices is projected to hit a high of RO 44.9 billion at the end of 2022, representing a hefty 32.4 per cent leap over the corresponding figure for 2021, according to multinational professional services firm KPMG Oman.

Citing data released recently by the Ministry of Finance, as well as the National Centre for Statistics and Information (NCSI), KPMG noted that nominal GDP in comparison stood at RO 32 billion at the end of September 2022.

The substantial jump comes amid a strong post-pandemic economic recovery driven by buoyant international energy prices, coupled with government efforts to manage the fiscal deficit and public debt.

KPMG’s analysis of Oman’s 2022 fiscal and economic performance points to healthy growth across all key performance indicators versus corresponding figures for 2021. Inflation averaged 2.06 per cent at the end of September 2022, compared to the global inflation rate of 8.8 per cent in 2022.

The trade balance rose to RO 7.7 billion as of September-end 2022, up from RO 2.9 billion over the same period in 2021. Total credit extended by conventional banks also grew 4 per cent to RO 28.9 billion as of October-end 2022, KPMG pointed out in its analysis of the Finance Ministry’s preliminary estimates for Fiscal 2022 released last week.

Attesting to concrete improvements in Oman’s fiscals during 2022, all three leading international credit rating agencies – S&P, Moody’s and Fitch - announced significant upgrades to Oman’s credit outlook.

S&P revised Oman’s credit rating from “B+” to “BB-“ in April 2022 and from “BB-” to “BB“ in November 2022 affirming a stable outlook. Fitch followed suit in August with a revision from “BB-“ to “BB”. Two months later in October, Moody’s affirmed Oman’s credit rating at “Ba3” and revised the outlook from stable to positive.

Another notable feature of Oman’s 2022 performance is the anticipation of a fiscal surplus of RO 1.150 billion – the first since 2013, said KPMG.

Contributing to this turnaround, among other factors, was a 66 per cent increase in oil export revenues to RO 7.5 billion, based on oil prices averaging $94 per barrel during the year, compared to the budgeted price of $50 per barrel. Gas export revenue too jumped 29 per cent to RO 3.6 billion for the year.

Importantly, the sizable fiscal surplus helped the government “avoid borrowing externally or drawing on reserves to finance the deficit”, KPMG noted. As a result of robust energy export earnings growth, the public debt was pared from RO 20.8 billion at the end of 2021 to RO 17.7 billion at the end of 2022.

The debt-to-GDP ratio is estimated to decline to 43 per cent compared to previous estimates of 83 per cent in 2022, it further stated.

The improved fiscal situation also paved the way for significant enhancements in social spending during 2022, according to the report. Allocations towards subsidies, targeted primarily at economically disadvantaged sections of the Omani population, were increased as well.

The most significant was the oil product subsidy, following the implementation of a cap on motor fuel prices, to RO 725 million for the year.

Other subsidies included RO 42 million towards electricity and other sectors, RO 25 million towards basic food items, RO 25 for subsiding housing bank loans, RO 17 million as additional social security for low-income families, and RO 19 million as loan subsidies reimbursed to Oman Development Bank.

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