High oil prices, prudent policies to help Oman sustain fiscal surplus

Oman Saturday 17/December/2022 23:45 PM
By: Times News Service
High oil prices, prudent policies to help Oman sustain fiscal surplus
The surplus should be used to reduce debt and establish productive projects.

Muscat: With Oman reporting a financial surplus of more than OMR1.2 billion at the end of October 2022, it is expected that the country will continue to achieve fiscal surpluses in the coming years, an Omani academic and economic analyst said.

After a decade, the state’s general budget broke the barrier of achieving a financial surplus and this increase was driven mainly by rise in oil and gas revenues and the continuation of prudent policies of fiscal balance initiatives to control and rationalise spending.

Dr. Mohammed Al Wardi, an academic and economic analyst, said that Oman is expected to continue to achieve financial surpluses in the coming years. “This is due to optimism in oil prices with Opec+ cooperation, supported by the existence of a flexible financial sustainability plan. Therefore, we must use the surplus to reduce debt and establish productive projects.”

He explained that Oman, like other Gulf countries, relies heavily on oil and gas revenues. The revenues from this sector until the end of October accounted for about 78 per cent of budget revenues, and hence the country’s dependence is still high on this sector.

Al Wardi stressed that we must work seriously to diversify the sources of income. “Despite the uncertainty and extreme volatility that prevails in future expectations of oil prices, all expectations of the IMF, the World Bank and sovereign rating agencies show that oil prices will remain at a comfortable level for the Gulf countries.”

World oil prices are expected to fluctuate between $80-90 per barrel in the near future.