Since the Covid 19 pandemic broke out, the whole world economy has been trickling, and the Sultanate of Oman has faced the repercussions too. As the year drew to an end, Sultan bin Salim Al Habsi, the Oman’s minister of finance, predicted that overall income for the 2022 budget would be 6% more than the total revenue received in 2021.
The Oman budget for FY 2022 is the second year of the Tenth Five-Year Development Plan (2021-2025), which sets the basis for the formation of Oman Vision 2040 performance targets.
A quick rundown of the 2022 budget elements are shown below.
- Total revenues in Oman’s 2022 budget are expected to be OMR 10.6 billion, down 3% from actual receipts in 2021, while the projected expenditure was OMR 12.1 billion.
- The budget deficit for 2022 is expected to be OMR 1.55 billion, up 27% from the actual deficit of OMR 1.2 billion in 2021 preliminary data.
- The Oman Investment Authority (OIA) is expected to generate OMR 0.8 billion in revenue, with OMR 2.9 billion in projected investments.
- Energy Development Oman (“EDO”) expects to invest OMR 1.2 billion.
- Oil and gas income account for 68 per cent of this total, with non-oil and gas revenues accounting for the balance of OMR 3.3 billion. As per the MOF, a conservative approach was taken, and the budget was anticipated using a USD 50 per barrel oil price.
According to the famous Standard and Poor’s (S&P) estimates, the country’s economic development will accelerate throughout 2022. The forecast for Oman’s economy was likewise upgraded from ‘steady’ to ‘favourable’. The most prominent is the adoption of VAT, which would assist the state exchequer in addressing fiscal deficit difficulties, diversifying the non-oil economy, and improving the country’s productivity and credit status.
Budget Plans for 2022
Oman’s General Budget for 2022 is in line with the 10th FDP’s goals, as it strives to fulfil the following economic and social development targets:
- Fostering investment and supporting the private sector to take the initiative in revitalising the economy
- Optimizing the effectiveness of digital transformation
- Providing low-income families with government subsidies to stimulate demand
- Using financial plan efforts to keep public expenditure at resilient and secure levels
- Maintaining governmental expenditure levels while increasing non-oil revenue streams
- Investor confidence will be boosted by enhanced sovereign credit ratings.
- Providing the required assistance to small and medium-sized businesses conducting business in Oman.
- Efforts to preserve financial stability and encourage economic growth will continue.
- Encourage training programmes that lead to increased job creation.
“Recently, the Sultanate of Oman’s policies and actions have started to yield results,” said Dr. Saeed bin Saqri, Minister of Economy. For continuing economic progress via fiscal sustainability and economic diversification, the government has undertaken significant adjustments to the country’s corporate, legislative, and tax structures.
In comparison to 2020, Oman’s credit ratings stayed constant in 2021; nevertheless, each of the three major rating agencies lifted Oman’s forecast in 2021.
Because of the lifting of Covid-19-related limitations and the adoption of VAT and excise tax, income flows in the second half of FY 2021. On the heels of stronger domestic demand, the economic stimulus program launched aided the economic recovery.
The country’s economy has faced a series of financial challenges in recent years, including a drop in international oil prices, an upsurge in general debt, natural calamities like cyclone Shaheen, and an increase in borrowing costs, all of which have had an adverse influence on the Oman’s financial health. Apart from all of this, Oman is expected to have stronger economic development this year as a result of the government’s ongoing structural changes, which are expected to enhance foreign direct investment through the development of new companies in Oman.
As a part of summing up, Oman is beginning to see glimmers of hope and progress. The Sultanate of Oman anticipates a faster-growing economy in 2022 with an improving business climate which also points to steady economic development over the years of the 10th FDP.