Dubai: Oman said on Sunday it expects its budget deficit to reach 5 per cent of gross domestic product (GDP) in 2022, well within the limits of a medium-term fiscal plan launched by the Gulf state last year to fix its heavily-indebted finances.
A relatively small crude producer, Oman is more sensitive than its hydrocarbon-rich Gulf neighbours to oil price swings, meaning it was hit especially hard by the price crash in 2020 amid the COVID-19 pandemic and worldwide economic lockdowns.
But higher oil prices this year, along with fiscal reforms, are expected to narrow state deficits and slow a rise in debt levels over the next few years.
Oman plans total spending of 12.1 billion rials ($31.43 billion) next year, state news agency ONA said on Sunday.
The Sultanate based its budget for next year on an oil price of $50 per barrel, ONA said, citing finance minister Sultan Al Habsi.
Next year, oil is expected to account for 68 per cent of total state revenues, the agency said.
In a medium-term fiscal plan launched last year, Oman was targeting to reduce its budget deficit from an estimated 11.5 per cent of GDP this year to 8.8 per cent of GDP next year.
The state news agency said Oman expects public debt to reach 75 per cent of GDP next year, which would be below previous estimates of an 86 per cent debt-to-GDP ratio to be achieved thanks to fiscal reforms that included the introduction of a value-added tax.
Central government debt last year increased to 81.2 per cent of GDP, the International Monetary Fund has previously said, adding it expected total debt to decline sharply to 47 per cent of GDP by 2026.
Oman has said this year it is working with the IMF to develop a debt strategy.