State budget posts OMR 784m surplus by end of first half of 2022

Muscat, 7 Aug (ONA): Total revenues collected by the end of the first half of 2022 amounted to OMR 6.724 billion, comprising a rise by 54.2 per cent compared to OMR 4.361 billion registered over the same period in 2021.

The collected revenues accounted for 63.6 per cent of total revenues estimated in the 2022 Budget which were OMR 10.580 million.

This increase is attributed to net oil revenues going up by the end of the first half of 2022 by 40.1 per cent to reach OMR 3.187 billion compared to the same period in 2021. This is as a result of a rise in average oil price to 87 US Dollars per barrel compared to 53 US Dollars per barrel achieved over the same period in 2021 as well as a rise in average oil production to 1,037,000 barrels per day compared to 952,000 barrels per day registered over the same period in 2021.

Gas revenues by the end of the first half of 2022 hit OMR 1.729 billion, comprising a surge by 137.8 per cent compared to the same period in 2021. This is a result of higher gas prices and production.

At the end of the first half of 2022, current revenues amounted to OMR 1.796 billion, up by 34.3 per cent compared to the same period in 2021. Tax and fees revenues amounted to OMR 1.125 billion, growing by 71.5 per cent compared to the same period in 2021.

At the end of the first half of 2022, corporate income tax stood at OMR 424 million, increasing by 23.3 per cent compared to the same period in 2021. Moreover, excise tax and VAT revenues amounted to OMR 48 million and OMR 345 million respectively by the end of the first half of 2022.

Further, other revenues amounted to OMR 671 million, including OMR 392 million of dividends received from Oman Investment Authority (OIA) at the end of the first half of 2022.

Public spending by the end of the first half of 2022 reached OMR 5.941 billion, rising by 8.6 per cent compared to the same period in 2021. Public spending amounted for 48.9 per cent of the 2022 Budget estimates of OMR 12.130 billion.

Development expenditure amounted to OMR 413 million, up by 38.1 per cent compared to OMR 299 million reported over the same period in 2021.

Current expenditure at the end of the first half of 2022 amounted to OMR 4.550 billion, increasing by 13.5 per cent compared to the same period in 2021. This is driven by an increase by 154.6 per cent in gas purchase and transport expenditure to reach OMR 639 million and a rise by 31.7 per cent in public debt service to OMR 521 million.

Total contributions and other expenses by the end of the first half of 2022 reached OMR 863 million, going up by 88 per cent compared to the same period in 2021. This is due to a rise in oil products subsidy to OMR 314 million and an allocated OMR 100 million for future debt obligations budget-item which aims to repay part of future loans.

At the end of the first half of 2022, the budget posted a surplus of OMR 784 million compared to a deficit of OMR 1.108 billion over the same period in 2021.

During the first half of 2022, the Ministry of Finance paid the private sector’s dues received via the fiscal system which completed the documentary cycle and stood at OMR 504 million.

The government benefited from the additional revenues during 2022 by accelerating economic recovery through increasing development expenditure to OMR 1.100 billion compared to previous figures, up by OMR 200 million to be allocated for priority projects and economic and social impact. As of the end of June 2022, development expenditure amounted to OMR 413 million, increasing by 38.1 per cent compared to OMR 299 million reported over the same period in 2021.

OMR 650 million were allocated for implementing additional development projects to be added to the projects list of the 10th Five-Year Development Plan (2021-2025). Such projects would be implemented across various health, education, housing, transport, tourism and municipal sectors.

In light of the current global geopolitical situations, which led to a rise in oil prices and price of basic food commodities, the Government revised the subsidies to mitigate the implications. By the end of the first half of 2022, government subsidy amounted to OMR 314 million allocated for oil products subsidy (fuel prices were fixed in November 2021) and OMR 11 million allocated for basic food subsidy.

Oman’s liability management exercise reduces public debt by buying-back some of the sovereign bonds for less than its nominal value, repayment of high cost loans and issuance of government Sukuk in Muscat Stock Exchange at preferable rates.

This contributed to declining total public debt which amounted to OMR 18.6 billion by the end of July 2022. Debt servicing cost achieved a saving of OMR 127 million, in addition to enhancing investor’s confidence and improving Oman’s credit ratings.