Oman achieves fiscal surplus in 2024 amid rising oil prices

Higher-than-anticipated oil prices in Oman’s 2024 budget significantly boosted revenues, surpassing expenditures and transforming a projected deficit into a robust surplus. This marks a major milestone in the country’s ongoing financial reform journey, reinforcing a positive economic outlook.

Oman’s revenues reached approximately OMR 12.7 billion in 2024, exceeding budget estimates by 15%. At the same time, expenditures were reduced to OMR 11.65 billion, 4% below the planned figure. This fiscal prudence turned a forecasted deficit of OMR 640 million into a surplus of OMR 540 million, according to preliminary data from the Ministry of Finance.

The windfall was largely driven by a 37% increase in average oil prices, which surged to $82 per barrel compared to the initially projected $60. This favorable price environment provided a crucial boost to Oman’s budget, even as oil production slightly declined to an average of 1.001 million barrels per day due to voluntary cuts under the OPEC+ agreement. Despite this, Oman’s breakeven oil price of $57.3 per barrel ensured fiscal stability, as noted by the IMF in its latest regional report.

Strategic reforms and economic gains

Oman capitalized on the higher oil revenues by implementing stringent domestic measures, including the introduction of VAT, which contributed to a steady and significant improvement in public finances. These measures are aligned with Oman’s Vision 2040, which seeks to diversify the economy and reduce reliance on oil revenues.

Fitch Ratings recognized Oman’s fiscal discipline by upgrading the country’s economic outlook from "stable" to "positive." The agency highlighted the government’s commitment to debt reduction as a key factor. Oman successfully lowered its public debt from 36.5% of GDP at the start of 2024 to 34% by year-end. Additionally, debt servicing costs declined by 10.4%, reflecting improved fiscal health.

A sustainable path forward

Oman is making concerted efforts to enhance non-oil revenues and optimize public spending. Measures such as the introduction of VAT and the reduction of energy subsidies are pivotal to achieving long-term financial sustainability.

Fitch’s upgrade and Oman’s surplus further underscore the country’s resilience and adaptability, signaling its readiness to navigate economic challenges while fostering sustainable growth. This progress lays a solid foundation for Oman’s ambitious Vision 2040 objectives and reinforces its position as a model for fiscal and economic reform in the region.