Oman’s economy firmly on the road to recovery

Oman Saturday 21/May/2022 23:45 PM
By: Times News Service
Oman’s economy firmly on the road to recovery
Improved economic performance a result of measures taken by the government supported by stability of average global oil prices. Photo: File

Muscat: The financial indicators for the first quarter of 2022 confirms that Oman’s economy is on a recovery mode. The state’s general budget achieved a financial surplus of more than OMR300 million, said the officials and financial experts, adding it reflects the efforts made by the government and the measures taken by it in this direction, supported as it was by the rise in oil prices in global markets.

Dr. Nasser bin Rashid Al Maawali, Undersecretary of the Ministry of Economy, said, “The better financial performance of the Sultanate of Oman by the end of the first quarter of this year reflects the efforts and measures taken by the government to ensure the sustainability of financial and economic conditions, supported by the stability of average global oil prices,” adding that “the financial surplus will be exploited and directed to stimulate growth. It will help enhance spending on priority development projects to serve the economic and social dimensions, as well as reducing the level of public indebtedness.”

In a statement to the Oman News Agency, he said the economic and financial indicators of the performance are very reassuring, and with the improvement in the financial performance of the Sultanate of Oman as indicated by different sectors of the economy, it is hoped that the performance will contribute to further accelerating the economic growth and financial activities in the country.

He pointed out that the financial and economic indicators for the first quarter of this year reflect the ability of the financial and economic planning system to deal positively with various global conditions and variables, whether those related to variables in energy markets or global supply and supply chain systems.

He said the continued improvement of financial performance and the surplus in the state’s general budget during the first quarter of this year are positive factors that ensure the achievement of the medium-term financial balance plan for the period 2020-2024, especially in utilizing the surplus to reduce public debt levels and stimulate economic recovery and increased spending on priority development projects.

Dr. Nasser bin Rashid Al Maawali stressed that the opportunities for comprehensive economic recovery have become better, especially for the sectors most affected by the pandemic and, on the other hand, the state’s general budget surplus of OMR357 million, as compared to a deficit of OMR751 million in the same period of 2021 will help in pumping liquidity to support the private sector and revive economic and commercial activity. During the first quarter of the year, the Ministry of Finance paid about OMR 146.4 million dues to the private sector.

He pointed out that in the short term, economic policy makers will be able to move between more expansive options in order to develop the basic economic infrastructure necessary to stimulate private investment, accelerate the implementation of major development projects, and create the optimal environment to attract more foreign direct investment.

He indicated that the increase in investment expenditures by about 131 percent during the first quarter of this year at OMR150 million, compared to the first quarter of last year, directly contributes to enhancing productive activities, raising economic growth rates and providing job opportunities for citizens.

The financial surplus also contributed to facilitating the current spending of ministries and civil units as also to easing the burden of public debt service. Spending on the loan interest clause amounted to about OMR 291 million and OMR50 million was dedicated to repaying debts.

The Undersecretary of the Ministry of Economy added: “The current level of oil prices and the increase in production in the Sultanate of Oman helped speed up economic recovery, as production averaged 1,025 barrels per day in the first quarter of this year, which will support the growth rates of the oil sector. The latest estimates of the International Monetary Fund indicate the GDP growth will be about 5.6 percent this year, supported by the growth of the oil sector and the non-oil sector by about 8 percent and 2 percent, respectively, and this is the highest expected growth rate among the GCC countries.

He also pointed out that the Ministry of Economy continuously monitors the repercussions of the global situation and its economic impacts, as well as the change in energy markets and the expectations that accompany this change, and aims primarily to take expansionary and flexible economic policy options capable of dealing with these variables and focused primarily on stimulating growth in economic diversification sectors as a guarantor of stability and continuity of economic growth and mitigate the expected economic risks.

He stated that the remarkable improvement in financial performance and the various measures taken by the Sultanate of Oman to improve the business environment have prompted international credit rating institutions such as Standard & Poor’s (S&P) and Moody’s to improve its future outlook for the Sultanate, which is a positive factor that contributes to attracting more foreign investments. He pointed out that the government will continue its public finance reform approach, as well as its efforts to diversify the economic base, and expand the scope of private sector participation to lead the locomotive of economic growth.

Dr. Nasser bin Rashid Al Maawali stressed that the economy of the Sultanate of Oman is based on a solid foundation towards overcoming the economic repercussions of the COVID pandemic, recording remarkable economic growth and continuing the process of construction and development led by His Majesty Sultan Haitham bin Tarik  to move forward towards a better future.

On his part, Dr. Khalid bin Said Al Ameri, Chairman of the Board of Directors of the Oman Economic Society, said the positive indicators achieved by the general budget of the Sultanate of Oman in the first quarter of this year are mainly due to the growth of net oil revenues to OMR1.56 billion, or 70.2 percent. He explained that the increase in revenues and exchange control led to a financial surplus estimated at OMR357 million.

He added, in a statement to the Oman News Agency, that achieving a financial surplus in the state’s general budget is a positive indicator, and puts the Sultanate of Oman in a good position to legalise or limit the state’s public debt, and contribute to paying the state’s indebtedness through the public debt service item in the budget allocated for the payment of interest on loans. Besides, the Sultanate will not have to take loans to pay off its budget deficit.

He pointed out that the improvement of financial indicators and a decrease in public debt risks with the achievement of financial surpluses is positively reflected on the credit rating of the Sultanate of Oman by credit rating agencies, adding that Fitch, Moody’s and Standard & Poor’s agencies have revised their outlook on the rating of the Sultanate of Oman.

Dr. Al Ameri explained that the payment of more than OMR146 million as dues to the private sector at the end of the first quarter of this year, gives a strong boost to liquidity in the market in particular and the economic cycle in general, stressing that directing the financial surplus to stimulate economic recovery and increase spending on priority projects, debt reduction and management of its risks, push the economic, investment and financial market aspects to recovery.

On the other hand, Mustafa bin Ahmed Salman, CEO of United Securities LLC,, stated that the budget achieved positive results for the first quarter, driven by the improvement in oil and gas prices, and that this performance would directly reflect on the positive future outlook for the general economy.

In a statement to the Oman News Agency, he indicated that the Sultanate of Oman is working to reduce public debt and restructure debt, which will have an impact on improving the credit rating in global markets, reducing the cost of debt and restructuring loans, and will be a major factor in attracting foreign investors.

He stressed that the economic improvement will be reflected positively on the level of confidence in the local markets and the Muscat Stock Exchange, as the valuations of local companies lie at attractive levels. So the strength of general factors will have a role in convincing investors of the stability of the surrounding factors, and will thus show the value and quality of the companies listed on the stock exchange.

He explained that this economic improvement will have a direct impact on improving the living conditions of citizens, and social spending will rise, in addition to additional spending for public development, especially on infrastructure.