Overview
The Sultanate of Oman achieved budget surpluses in 2022, 2023, and 2024 — three consecutive years of positive fiscal balances after years of deficits. This represents the most significant macroeconomic achievement under Vision 2040 and Sultan Haitham’s administration.
The Turnaround
| Year | Fiscal Balance (% GDP) |
|---|---|
| 2017 (Baseline) | -11.7% |
| 2018 | -8.5% |
| 2019 | -6.0% |
| 2020 (COVID) | -16.8% (estimated) |
| 2021 | -4.2% |
| 2022 | +1.5% |
| 2023 | +2.0% |
| 2024 | +2.8% (est) |
Drivers of the Turnaround
Oil price recovery (2022-2023): Higher crude oil prices (Brent above $80-90/barrel through much of 2022-2023) significantly increased Oman’s hydrocarbon revenues — providing the initial impetus for surplus.
Expenditure discipline: The government maintained spending control even as revenues rose — resisting the temptation to expand expenditure in line with revenue, instead using surpluses for debt reduction and investment.
VAT revenue (from April 2021): The 5% Value Added Tax generates approximately 1-1.5% of GDP annually — a new, sustainable non-oil revenue stream.
Non-oil revenue growth: Excise taxes, fees, and non-tax revenues have grown in aggregate, contributing to revenue diversification.
Debt refinancing: Lower borrowing costs (as credit ratings improved) reduced debt service costs, freeing fiscal space.
Deployment of Surpluses
Rather than consuming surpluses in current expenditure, Oman’s fiscal management has channelled improved fiscal capacity into:
- Debt reduction: Gross debt falling from 44% to ~35% of GDP
- Oman Future Fund: OMR 2 billion capitalised in 2024 for strategic development investment
- Credit rating improvement: Supporting sovereign rating upgrades across major agencies
Sustainability Questions
The fiscal surplus depends partly on oil prices remaining elevated. If Brent crude falls significantly (below $50/barrel), Oman’s break-even oil price (estimated at approximately $75-80/barrel for a balanced budget) would re-emerge as a constraint.
Vision 2040’s non-oil revenue target (18% of GDP from the current ~9.5%) is designed to reduce this oil price sensitivity over time — but the full transition to oil-independent fiscal sustainability remains a 2040-horizon target.