Oman forecasts $1.7 billion 2024 budget deficit amid oil challenges

Budget gap prompts focus on economic diversification
Oman forecasts $1.7 billion 2024 budget deficit amid oil challenges
Oman expects that oil revenues will reach OMR5.9 billion in 2024

Oman is anticipating a budget deficit of OMR640 million  ($1.66 billion) in 2024, marking a shift from the surplus recorded in 2023. This deficit, equivalent to approximately 1.5 percent of the country’s gross domestic product (GDP), is attributed to lower oil production and prices.

Moreover, Oman’s 2024 budget is structured around an average oil price of $60 per barrel. That is a conservative estimate compared to prevailing market expectations.

Diversification efforts

Oman’s Minister of Finance, Sultan Salim Al-Habsi, said that the budget estimates ensure that financing needs are met in the event of a decline in oil prices. Oman expects that oil revenues will reach OMR5.9 billion in 2024. That is a decrease from the estimated OMR6.9 billion in 2023. Therefore, the nation is compelled to explore avenues beyond hydrocarbons. Despite efforts to diversify income sources and economic sectors, Oman remains heavily reliant on oil revenue.

Oman’s 2024 budget outlines total revenues of around OMR11.01 billion, a 9.5 percent increase from 2023 estimates. Moreover, Oman expects non-oil revenues to reach OMR520 million. Simultaneously, it expects expenditures to rise by 2.6 percent to approximately OMR11.65 billion.

Read: Central Bank of Oman raises OMR29.45 mn through T-bills allotment

Economic growth

As one of the smaller GCC economies, Oman initiated a medium-term fiscal program in 2020 to address public debt. It aims to diversify its revenue sources and stimulate economic growth. The deputy finance minister emphasized the national benefits of reducing total public debt. He highlighted the importance of contributing to annual savings and reducing debt by the end of 2023. Despite fiscal challenges, Oman plans to repay OMR1.6 billion in debt in 2024, demonstrating its commitment to sustainable financial management.

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