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2024 Oman budget focuses on social welfare, debt reduction

1 Jan 2024 By GULAM ALI KHAN

Muscat – Oman’s state budget for 2024 aims to maintain spending levels in essential sectors such as education, health and housing, while enhancing social welfare schemes. Simultaneously, the budget prioritises reducing public debt further during 2024.

The budget estimates total public spending at RO11.65bn for this year, reflecting a 2.6% increase compared to the estimated public spending in 2023.

The Ministry of Finance disclosed that the total estimated revenues for the state’s general budget in 2024 are expected to be RO11.01bn, an increase of 9.5% compared to the estimated revenues for 2023.

This year’s budget forecasts a deficit of approximately RO640mn, representing 6% of total government revenues and 1.5% of GDP. To bridge this deficit, internal and external borrowing of about RO240mn is planned, along with drawing on reserves amounting to about RO400mn.

As per the budget guidance report released on Tuesday, the government does not intend to borrow to finance the 2024 budgeted deficit in the scenario of an increase in public revenue as a hedging procedure. Nevertheless, the government may borrow to replace high-cost loans with lower-cost loans.

Addressing a press briefing on Monday, H E Sultan bin Salim al Habsi, Minister of Finance, said oil revenues in the 2024 budget constitute 54% of total revenues, with the gas sector contributing 14%, and non-oil revenues making up 32% of total public revenues.

The estimated revenues for Oman’s 2024 budget are calculated based on an assumed oil price of US$60 per barrel and an average daily oil production of 1.031mn barrels per day.

H E Habsi informed that the estimation of these public revenues is part of a precautionary approach to mitigate the impact of any financial challenges that may arise during the fiscal year 2024 and to ensure that financing needs are met in case of a decline in oil prices.

Furthermore, H E Habsi emphasised that the state’s general budget for 2024 considers a balance between determinants and priorities, aiming to continue paying off public debt, reducing it as much as possible and improving the business environment.

Oman’s budget supports social welfare by empowering the Social Protection Fund to play its desired role as an umbrella for initiatives aimed at enhancing insurance coverage and social protection for citizens.

The budget has allocated a substantial sum of RO1.31bn to cater to these social protection programmes. Out of this generous allocation, RO560mn has been earmarked for the implementation of programmes catering to the elderly, children, persons with disabilities, widows and orphans, in addition to providing crucial support for family income.

Furthermore, a sum of RO750mn has been dedicated to comprehensive social insurance programmes, encompassing coverage for work injuries, occupational diseases, job security and maternity insurance.

The Ministry of Finance indicated that the government’s total financing needs for the fiscal year 2024, based on the approved oil price in the budget, will amount to RO2.2bn, covering the deficit and expected loan installments to be repaid during this year.

The ministry also highlighted the fact that Oman’s public debt-to-GDP ratio stood at about 35% at the end of 2023, marking a 50% decline compared to its peak in 2020 when the sultanate’s public debt reached about 70% of GDP.

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