Fiscal Deficit
Definition
A fiscal deficit occurs when a government’s total expenditures exceed the revenue it generates, excluding money from borrowings. The deficit represents the gap that must be financed through debt issuance, asset drawdowns, or other financing mechanisms.
Context
Oman experienced significant fiscal deficits during the oil price downturns of 2015 to 2020, when reduced hydrocarbon revenues could not cover committed government spending. These deficits led to increased borrowing and prompted fiscal reforms including subsidy cuts and VAT introduction.
Example
In 2020, Oman’s fiscal deficit reached approximately fifteen percent of GDP as oil prices collapsed during the pandemic, forcing the government to issue international bonds and draw on reserves to finance the shortfall.