Overview
The Ministry of Finance (MOF) is responsible for Oman’s fiscal policy, public budget preparation and execution, debt management, and coordination of government financial management. Under Vision 2040, the Ministry is accountable for the Economic Leadership and Management priority’s fiscal targets — including achieving a budget surplus and keeping gross debt below 60% of GDP.
The Fiscal Turnaround
Oman’s fiscal position deteriorated severely during the 2015-2020 period of low oil prices — the deficit reached -11.7% of GDP in 2017, the baseline for Vision 2040’s fiscal targets. The Ministry’s management of the fiscal adjustment is one of the most significant macroeconomic achievements of the Vision 2040 period:
2022: First fiscal surplus in many years — approximately +1.5% of GDP 2023: Second consecutive surplus — approximately +2.0% of GDP 2024: Third consecutive surplus — approximately +2.8% of GDP (estimated)
This turnaround was achieved through:
- Expenditure rationalisation: Reducing government spending as a share of GDP, including subsidy reforms
- Revenue diversification: VAT implementation (2021, 5% rate), higher excise taxes, increased non-tax revenues
- Debt management: Active refinancing of expensive external debt at lower rates as credit ratings improved
- Oil revenue windfall: Higher oil prices through 2022-2023 provided the initial surplus impetus
VAT Implementation
Oman was the last GCC state to implement VAT, doing so from April 2021 at a 5% rate. The Ministry managed the implementation with relatively limited economic disruption. VAT now generates approximately 1-1.5% of GDP in annual revenue, a significant contribution to non-oil revenue diversification.
Debt Management
Gross public debt has declined from approximately 44% of GDP (baseline) to approximately 35% (2024 estimate) — creating meaningful fiscal headroom. The Ministry has actively managed the debt portfolio: refinancing short-term debt, extending maturities, and diversifying lenders (Eurobonds, Sukuk, bilateral facilities, and Islamic bonds).
Oman’s improved credit rating — upgraded by Moody’s, S&P, and Fitch from speculative grade to investment grade territory during 2021-2024 — has reduced borrowing costs and improved market access.
Oman Future Fund
The Ministry of Finance chairs the board of OIA and played a central role in establishing the Oman Future Fund (2024) with initial capitalisation of OMR 2 billion — a strategic use of improved fiscal capacity to create long-term investment capital rather than consuming surpluses in current expenditure.