Budget 2026 as Oman’s confidence barometer

MUSCAT, JAN 6

Oman’s Budget 2026 is being read through one number: the deficit. Leading Omani brokerage services firm United Securities says the more revealing test is confidence — whether the fiscal plan can turn market optimism and credit growth into lasting, sustained non-oil expansion as the country enters the 11th Five-Year Plan.

A research note from the Muscat-based company highlights the government’s decision to keep the oil-price assumption at $60 a barrel, calling it an “adequate margin of safety” that protects the baseline and leaves room for upside if prices surprise higher. It is a cautious anchor and it signals that policy is trying to avoid the boom-bust rhythm that has shaped past budget cycles.

A second, quieter stabiliser is gas. United Securities argues that greater reliance on gas revenues can help reduce exposure to oil-price swings, giving the budget a broader hydrocarbon base and, in theory, more predictable planning space for diversification spending.

That framing is supported by a better-than-planned 2025 outcome. The firm estimates the 2025 deficit at RO 480 million, below the RO 620 million originally budgeted, largely because oil prices came in higher than assumed while non-oil revenues broadly held to plan. For 2026, the budgeted deficit is RO 530 million.

United Securities’ key point is that deficits are no longer automatically treated as a red flag. Under the 11th Plan, the note expects deficits through 2030, reflecting a deliberate choice to fund investment-led growth while keeping debt within a manageable band. It expects debt metrics to stay around the 30–35% of GDP range in 2026, helped by recent sovereign rating improvements that should support borrowing costs over time.

On the growth side, United Securities forecasts real GDP growth of 4.0% in 2026, a step up from its 2025 estimate of 2.7%, with both hydrocarbon and non-hydrocarbon activity contributing. The message is straightforward: fiscal discipline is meant to create space for acceleration, not austerity.

Confidence also shows up in the financial system. The research points to continued growth in banking assets and lending; and it flags the pace of further interest-rate reductions as a variable that could lift credit demand in 2026. Housing, it argues, is likely to be one of the main beneficiaries — a reminder that the budget’s impact will be felt not only through government contracts, but also through household and business financing conditions.

The conclusion is balanced: Budget 2026 is cautious where it must be, but it is also asking for execution — timely projects, disciplined spending quality and non-oil revenue growth that supports competitiveness. If those pieces move together, confidence can become growth. If not, the deficit will be the headline again.