MUSCAT: Dr Saeed bin Mubarak al Muharami, Professor of Finance at Sultan Qaboos University, said there is a difference between net income and net cashflows, noting that the figures highlighted at the announcement of the state budget are typically based on the income statement, which records revenues and expenses, including interest on debt as part of debt service costs.
In comments, Al Muharami said accounting includes more than one set of financial statements, but two are key to understanding the budget discussion: the income statement and the cashflow statement, which tracks actual cash inflows and outflows that are not captured in the income statement — such as repayments of debt principal. He added there is a difference between interest due on debt and instalments of principal that must be paid.
Al Muharami said this distinction helps answer a common question: if Oman’s projected 2026 budget deficit is RO 530 million, why does the government plan to borrow more than that amount?
He said the expected RO 530 million deficit is recorded on the income statement. However, on the cashflow statement — which reflects real cash movements — the net cashflow position is expected to show a deficit of RO 2.292 billion, as RO 1.762 billion in debt principal falls due for repayment in 2026.
Al Muharami said the government plans, during 2026, to seek around RO 990 million in external borrowing and RO 902 million in domestic borrowing to cover the RO 1.762 billion of debt principal instalments due and to finance the RO 530 million budget deficit. The plan also includes drawing about RO 400 million from state reserves to finance the remaining gap.
Al Muharami said these steps represent a proactive financial plan based on forecasts that are typically built on worst-case assumptions, expressing hope that actual outcomes will be more positive.
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