Actual revenues accumulated by the Omani government in 2020 have touched $22.09 billion, a 20.5 percent decline from estimates for the year. However, the country’s public spending for last year was 2.1 percent lower than the budget.
According to the latest bulletin of the Ministry of Finance (MoF) of Oman, “The reduction was mainly due to a decline in oil and gas revenue by $4,941 million as a result of lower average crude oil price of $47.6 per barrel over the assumed price of $58 per barrel in 2020 budget. This is in addition to the consequences triggered by the COVID-19 pandemic.”
Despite the Omani Government’s obligation to pay the deferred payments from previous years with a value of $735 million, the actual total spending in 2020 remained lower than the budgeted figures by $711 million, the Ministry noted.
Last year’s actual public spending totaled $33.57 billion, which was 2.1 percent lower than the estimate of $34.2 billion in the budget. “This reduction comes in line with the precautionary measures taken by the Government to mitigate the effects of lower oil prices and the COVID-19 pandemic. The measures have helped to reduce development expenditure of Government civil units by 11 percent compared with the approved budget,” the Ministry said.
Still, allocations towards subsidy and other contributions climbed 29.5 percent to help meet “additional needs and settle pending payments of previous years”, it stated.
The actual deficit in 2020 increased to $11.48 billion, up by 76.9 percent as compared to the 2020 budget deficit of $6,495 million due to a drop in oil and non-oil revenues over the budgeted figures. This was covered by external and local funding, accounting for 88.7 percent of the total deficit, while $1299 million was withdrawn from Oman Investment Authority (OIA) to cover the remaining 11.3 percent of the actual deficit of 2020.
Commenting on the reports of international rating agencies on the Omani economy, the Ministry noted that S&P Global Ratings had affirmed, in its credit rating report released in April 2021, its ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings on Oman.
Fitch, in its report issued in May 2021 affirmed Oman at ‘BB-’. It predicts that the budget deficit will narrow to 6.1 percent of GDP in 2021, and projects growth to strengthen to 3.3 percent in 2022.
According to the report issued recently, Moody’s upholds Oman’s credit rating at Ba3. The agency predicts real GDP growth from -2.6 percent in 2020 to 2.6 percent in 2021 and 3.5 percent in 2022. It also forecasts the budget deficit to improve from -18.1 percent in 2020 to -3.6 percent in 2021.