Muscat – Oman’s budget surplus shrank by more than 44% to RO207mn in the first two months of 2024, compared to the RO372mn surplus recorded in the corresponding period last year, mainly due to a decline in the sultanate’s oil and gas revenues this year.

The sultanate’s total public revenues decreased to RO1.958bn in the January–February period this year, down 9% compared to the RO2.148bn registered in the same period of 2023, according to the Fiscal Performance Bulletin published on Monday by the Ministry of Finance.

Net oil revenue decreased to RO1.102bn, a drop of 4% compared to the RO1.153bn registered over the same period in 2023, mainly due to lower crude prices compared to last year.

The average price at which Oman sold its crude oil stood at $86 per barrel for January-February period, and the average oil production stood at 1,024,000 barrels per day during the first two months of 2024.

Net gas revenue dropped by a whopping 46% to RO281mn in the first two months of 2024 compared to the same period of 2023. This is attributed to a change in the procedures of collecting gas revenue.

‘This decline (in net gas revenue) is due to the deduction of gas purchase and transport expenses from the total revenue collected from the Integrated Gas Company,’ the Ministry of Finance bulletin noted.

The government’s current revenue increased by RO102mn to stand at RO573mn for the January–February period of 2024 against the RO471mn collected in the same period of 2023.

‘This increase is mainly attributed to the receipt of returns from Oman Investment Authority’s profits, recording approximately RO200m collected in January,’ the ministry said.

Slight decrease in spending

Oman’s total public spending for the first two months of 2024 decreased by RO25mn or 1% to RO1.751bn compared to the same period in 2023.

Of the total spending, the expenditure of civil ministries was down by RO17mn to RO1.277bn compared to RO1.294bn during the corresponding period in 2023.

Development expenditure of ministries and civil units stood at RO93mn, with a spending rate of 10% of the total development expenditure allocated for 2024 (RO900mn).

The total of contributions and other expenses amounted to RO231mn, comprising a surge by 75% compared to RO132mn during the same period in 2023. Subsidies for the Social Protection System and petroleum products till the end of February 2024 stood at RO93mn and RO44mn, respectively.

Transfers for the loan payment item stood at RO66mn in the first two months of this year.

In the wake of Oman’s improving fiscal situation, S&P Global Ratings recently revised its outlook on Oman to ‘positive’ from ‘stable’. At the same time, the rating agency affirmed its ‘BB+/B’ long- and short-term foreign and local currency sovereign credit ratings on the sultanate.

The positive outlook reflects S&P’s confidence that the Omani government’s balance sheet will strengthen and the economic reform program could lead to faster-than-expected deleveraging in many state-owned enterprises, without dampening economic growth outcomes. This would strengthen the economy’s resilience to adverse oil price shocks.