Muscat – Helped by a sharp increase in revenues from oil, gas and taxes this year, Oman’s government managed to sharply reduce its budget deficit by more than RO1.7bn during the January–October period of 2021 against the same period of last year.

The sultanate’s budget shortfall dropped by 62.9 per cent to RO1bn in the first ten months of 2021 from RO2.713bn recorded in the same period of 2020, the Ministry of Finance said on Sunday.

Oman recorded a 28.1 per cent increase in public revenues in the first ten months of 2021 as oil and gas prices during this period remained higher compared with the same period a year ago. Total revenues rose to RO8.332bn during the January–October period of this year against RO6.502bn recorded in the same period of 2020.

‘This is as a result of improved oil prices, supported by growing fuel demand. Oil prices averaged US$58.89 per barrel at the end of October 2021, this led to an increase in net oil revenue by 35.4 per cent and a rise in gas revenue by 50.6 per cent,’ the Ministry of Finance said in its monthly Fiscal Performance bulletin.

Oman’s total oil production also slightly increased this year. Daily average oil output increased 1.3 per cent to 993,400 barrels per day (bpd) in October compared with 983,000 bpd recorded in the previous month, according to the data released by the National Centre for Statistics and Information (NCSI).

Oman’s total oil production (including condensates) increased by 1.0 per cent to 293.22mn barrels during the January-October period of 2021, compared to 290.37mn barrels in the same period of 2020. Of the total oil production, crude output decreased 3.6 per cent at 226.48mn barrels, while condensates production rose 20.2 per cent to 66.74mn barrels in the first ten months of this year against the corresponding period of 2020.

The sultanate’s net oil revenues increased to RO4.443bn during the January-October period in 2021 from RO3.281bn in the corresponding period of last year. Gas revenues, on the other hand, surged to RO1.697bn this year compared to RO1.127bn in the same period of 2020, the ministry’s data showed.

Moreover, the government’s current revenues jumped by 40.8 per cent at the end of October 2021 to RO2.128bn as compared to RO1.512bn recorded in the same period in 2020.

This included tax and fees revenue, which amounted to RO1.024bn and non-tax revenue of RO1.104bn.

By the end of October 2021, total public spending amounted to RO9.339bn, a modest increase of 1.3 per cent compared with RO9.216bn total spending over the same period of 2020, the data showed.

With Oman’s improving financial position and positive outlook for economic growth this year and in 2022, global credit rating agencies recently revised up their outlook on the sultanate’s ratings.

S&P Global Ratings upgraded its outlook on Oman to ‘positive’ from ‘stable’ as the world’s biggest ratings agency now believes that the sultanate’s reforms programme and higher oil prices will narrow fiscal deficits and slow the increase in government debt.

Moody’s also changed the outlook on the Government of Oman’s issuer rating to ‘stable’ from ‘negative’.

According to Moody’s, the change in outlook reflects the significant easing of government liquidity and external financing pressures, mainly as a result of the ongoing implementation of the Medium-Term Fiscal Plan and higher oil prices.