Tuesday 23 April 2024

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Oman to post first fiscal surplus in a decade: Fitch

MUSCAT, August 10, 2022

Fitch Solutions, a leading provider of credit intelligence, has said that Oman’s latest data release supports its view that the sultanate will post its first yearly fiscal surplus in a decade in 2022 amounting to 6.5% of GDP. 
Revenue figures were in line with Fitch’s expectations, and it expects revenue to rise further in H2 2022 as a result of high energy prices. 
“We expect that expenditure growth will remain moderate due to authorities’ commitment to fiscal consolidation. Government debt data also came in line with our view as we expect it to further decrease to OMR17.5 billion ($45.46 billion) towards the end of the year, bringing Oman’s debt to GDP ratio to 47.5% in 2022, down from 67.3% in 2021,” Fitch said.
Posting surplus
Oman’s Ministry of Finance released data showing that the sultanate posted a surplus of OMR784 million in H1 2022 following a deficit of OMR1.1 billion in H1 2021. The improvement was driven by a 54.2% y-o-y increase in government revenues, mainly supported by a 40.1% y-o-y increase in oil revenues and a 137.8% y-o-y increase in gas revenues. 
Data also showed a decrease in the public debt from OMR20.8 billion at the end of 2021 to OMR18.6 billion at the end of July 2022, in line with government efforts to reduce debt servicing cost.
Fitch expects that Oman’s hydrocarbon revenues will continue to grow in H2 2022, further widening the country’s fiscal surplus. Oman’s average oil price of $87.0 per barrel (/bbl) for H1 2022 is below the average Brent oil price for H1 2022 ($105.85/bbl) as Oman’s budgeted oil price is lagged by approximately three months. 
More hydrocarbon revenues
An increase in Oman’s average oil price in the coming months will lead to more growth in its hydrocarbon revenues in H2 2022, supporting overall revenue growth which we forecast at 41.3% in 2022.
Similarly, Fitch expects that expenditure growth to moderate in H2 2022, in line with authorities’ fiscal consolidation efforts.
The data release showed an increase of 8.6% in total expenditures, on the back of additional fuel and food subsidies due to soaring prices. Fitch expects that spending growth will decelerate in H2 2022 as global commodity prices start decreasing, reducing pressure on total expenditures, which Fitch forecasts at 5.1% in 2022.-- TradeArabia News Service


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