Gas drives Oman’s Q1 gains; spending up 31%

MUSCAT, AUG 23

Oman increased development spending by nearly a third in the first quarter of 2026 while keeping the state budget close to balance, as higher gas, oil and current revenues lifted government income faster than expenditure.

Development expenditure rose 31 per cent year-on-year to RO 334 million in the three months to the end of March, while the budget recorded a deficit of RO 25 million, down from RO 136 million in the corresponding period of 2025, according to preliminary Ministry of Finance figures.

Total public revenue increased 13 per cent to RO 2.985 billion from RO 2.635 billion a year earlier. Expenditure rose at a slower pace of 9 per cent, reaching RO3.010 billion compared with RO 2.771 billion.

A closer look at the revenue mix shows that gas, rather than oil, provided the largest incremental contribution to the improvement.

Net gas revenue rose 36 per cent to RO 593 million from RO 436 million, an increase of RO 157 million. That represented about 45 per cent of the RO 350 million year-on-year increase in total government revenue, according to an Observer calculation based on the ministry’s figures.

Net oil revenue increased at a more moderate 5 per cent to RO 1.535 billion from RO 1.468 billion, adding about RO 67 million. Current revenue rose 13 per cent to RO 817 million, up RO 92 million from a year earlier.

The figures underline the continuing importance of hydrocarbons to Oman’s public finances, but also show that movements within the hydrocarbon revenue base can differ significantly between oil and gas.

The average realised oil price was about $64 a barrel during the first quarter, with average production at approximately 1.025 million barrels per day.

That realised price was above the $60-a-barrel assumption used to prepare Oman’s 2026 state budget. The government has budgeted annual revenue of RO 11.447 billion against expenditure of RO 11.977 billion, leaving a planned deficit of RO 530 million for the year.

On the expenditure side, current spending remained the largest component, rising 8 per cent to RO 2.119 billion from RO 1.967 billion a year earlier.

Development expenditure increased to RO 334 million from RO 254 million and reached 26 per cent of the RO 1.3 billion allocated for development spending during the full year. The ministry’s definition includes expenditure on development projects as w

Contributions and other expenditure, by contrast, fell 15 per cent to RO417 million from RO 490 million.

Government expenditure during the quarter included RO154 million for the social protection system, RO 80 million for the electricity sector and RO17 million for support for petroleum products. A further RO 75 million was transferred to the provision for debt repayment.

Spending on social and basic sectors totalled RO 1.233 billion during the first quarter, equivalent to about 41 per cent of overall government expenditure based on the published figures.

The fiscal data also provide an indication of the flow of government payments into the domestic economy.

The Ministry of Finance said more than RO 362 million in private-sector dues were paid during the first quarter for claims submitted through the government financial system with completed documentation. It said fully documented private-sector claims are settled within an average of five working days.

Public debt stood at about RO 14.5 billion at the end of March, unchanged from the level recorded at the end of 2025. It was, however, around 2 per cent higher than the RO14.3 billion recorded at the end of the first quarter of last year.

The ministry attributed the year-on-year increase to financing requirements alongside measures to develop the domestic debt market and manage obligations falling due during the year.

The first-quarter outcome gives Oman a relatively narrow fiscal gap at the start of the year, but it should not be extrapolated directly into a full-year result. Oil-price movements, the timing of hydrocarbon revenue collection and the pace of expenditure through the remaining quarters will determine the final balance.