Oman’s economy surges with higher oil prices, fiscal reform

Oman’s economy has enjoyed a strong first half to 2022 and the outlook for the rest of this year and 2023 is positive. The sultanate’s public finances have significantly improved compared to a year ago, largely thanks to higher oil and gas revenues but also to the country’s fiscal policies and discipline over the last few years.

Oman recorded a fiscal surplus of 784 million Omani rials ($2 billion) in the first half of 2022 compared to a deficit of 1.1 billion rials ($2.9 billon) in the same period last year. Total revenues increased by 54.2% and public spending expanded to 8.6% compared to a year ago. The larger public revenue was thanks to a significant increase in gas revenue, which increased by 137.8% compared to the same period in 2021.

Dominic Pratt, country analyst for the Economist Intelligence Unit (EIU), adds that the non-oil economy has benefitted from an uptick in activity as the country recovers from the COVID-19 pandemic.

“Meanwhile, a number of sectors including transport and manufacturing have benefitted from growing capital investment, supported by rising government revenues,” he told Al-Monitor. This trajectory is forecast to continue into the second half of 2022, with real GDP growth for the year forecast at over 5%. In 2023, oil prices will remain high but begin to decline gradually, prompting a deceleration of export-led growth.”