Fiscally prudent 2022 State Budget unveiled with lowest deficit since 2014

MUSCAT: The Omani government unveiled a fiscally prudent Annual State General Budget for 2022 with revenues totaling an estimated RO 10.580 billion based an assumed price of $50 a barrel (versus $45/barrel for 2021).

The contribution of Oil & Gas is estimated at RO 7.24 billion, constituting 68 per cent of total revenues, while non-oil revenues will account for the remaining 32 per cent (RO 3.34 billion), the Ministry of Finance noted in its Budget statement issued on Saturday.

Total public spending is set at RO 12.13 billion, which is two per cent higher than the corresponding figure for 2021. This will include an allocation of RO 1.3 billion towards the cost of servicing the country’s public debt.

The deficit of RO 1.5 billion, representing 15 per cent of total expenditure [about 5 per cent of Gross Domestic Product (GDP)], is well within the range projected in the Medium Term Fiscal Plan (MTFP). Part of the deficit will be financed from external and internal borrowings, while the rest of the deficit, estimated to be RO 400 million, will be funded through withdrawals from the State’s reserves.

In a statement, Sultan Salim al Habsi, Minister of Finance, said that preliminary data point to the fact that the budget deficit for 2022 is set to be the lowest deficit since 2014.

Al Habsi credited the lower deficit to the government’s resolve to adhere to the roadmap outlined by the MTFP, both at the level of revenues and spending, with the overall aim of meeting the main objectives and increasing the confidence of lenders and credit rating agencies.

The Minister explained that the Budget 2022 was drafted in a manner that it conforms with the targets and broad goals of the 10th Five Year Plan (2021-2025), representing the first phase of Oman Vision 2040, the country’s long-term strategy to achieve fiscal sustainability and motivate economic diversification sectors.

He stressed spending levels will be maintained towards basic services such as education, health, housing and social welfare. This is in addition to maintaining efforts to bolster the business climate in the country and expanding partnership projects undertaken with the private sector.

Any surplus accruing from oil revenues rising above the assumed oil price benchmark will be prioritized toward slashing the deficit and cutting the country’s public debt, he added. (With inputs from ONA)