Economy

Oman posts $220m budget surplus in January

March 18, 2024, 2:24 PM

Muscat waterfront. Oman's budget surplus was down to an 'increase in government investments', said the state news agency

Public revenues rose 3%
Oil income has dropped
Debt was 69% of GDP in 2020

Oman’s budget surplus reached nearly a quarter of a billion dollars in January, helped by public income from state investments, according to its state-owned news agency.

The surplus was OR85 million ($220 million) by the end of January, down just over 40 percent on the OR145 million surplus registered in the same month of 2023, said the Oman News Agency.

Net oil revenue dropped 1 percent year on year to OR595 million while public expenditure rose 11 percent to OR929 million.

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Oman’s budget surplus was “attributed mainly to an increase in government investments”, the news agency said, with public revenues rising 3 percent to just over OR1 billion in January.

Public expenditure of civil ministries stood at OR680 million, down around 3 percent compared to the same period in 2023.

The average oil price for January stood at $90 per barrel and average oil production at 1.04 million barrels a day. Net gas revenues fell 48 percent to OR135 million.

The International Monetary Fund estimates that Oman has a fiscal breakeven oil price of $54.80 per barrel in 2024, up slightly from $54.30 last year.

Oman has been taking steps to improve its economic resilience after a slowdown. The economist and AGBI columnist Matein Khalid wrote last week that in 2020, the sultanate was saddled with an “unsustainable” public sector debt burden equating to 69 percent of GDP.

But “draconian attention” to the fiscal deficit and structural reforms have since reduced the debt-to-GDP ratio to around 38 percent, according to Khalid.

The sultanate announced several government investments in January, including a $210 million data centre at the Sohar Port and Freezone and more than $2 billion of investment in three energy projects in the Musandam governorate.

At the start of the year, Standard Chartered bank forecast a rebound in Oman’s credit rating. Its ratings were raised to BB+ last year, one notch below investment grade.

Its foreign direct investment rose 26.6 percent year on year to OR4.8 billion in the third quarter of 2023, led by the UK.

In January, however, Oman was still cautious in its forecasts, projecting a budget deficit of OR640 million for 2024.