Oman said on Sunday it expects its budget deficit to reach 5 percent 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 neighbors 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.
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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 percent 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 percent of GDP this year to 8.8 percent of GDP next year.
The state news agency said Oman expects public debt to reach 75 percent of GDP next year, which would be below previous estimates of an 86 percent 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 percent of GDP, the International Monetary Fund has previously said, adding it expected total debt to decline sharply to 47 percent of GDP by 2026.
Oman has said this year it is working with the IMF to develop a debt strategy.
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