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Oman's fiscal outlook improves as oil prices surge

Efforts to put public finances on a healthy footing and tackle chronic budget deficits have started to pay off, facilitated by a sharp increase in oil prices, Oman’s main export.

Oman's fiscal situation is "very stable and improving,” three sources at the sultanate's National Program for Fiscal Balance told Al-Monitor on condition of anonymity. Also known as the Tawazun program, it reports to the Ministry of Finance with a dotted line to the country’s ruler. Sustaining public finance has been a race against the clock since 2020, when Sultan Haitham bin Tarek inherited an indebted state from his predecessor, the late Qaboos bin Said Al Said.

Fitch Ratings upgraded Oman's outlook to "stable" from "negative" in December 2021 to reflect improvements in key fiscal metrics. Interestingly, the rating agency pointed out the high correlation between swings in oil prices and the country’s fiscal health. It estimated that higher hydrocarbon revenues, which grew only by a third, “likely accounted for more than half” of budget deficit narrowing in the fiscal year 2021 to nearly five times less than in 2020.

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