Fiscal Surplus
Definition
A fiscal surplus occurs when a government’s revenues exceed its total expenditures during a given period. The surplus can be used to repay existing debt, build financial reserves, invest in sovereign wealth funds, or fund capital projects without borrowing.
Context
Oman achieves fiscal surpluses during periods of elevated oil prices combined with restrained government spending. Recent surpluses following the post-pandemic oil price recovery have enabled debt reduction and reserve accumulation, strengthening the Sultanate’s fiscal position.
Example
When oil prices exceeded eighty dollars per barrel in 2022, Oman recorded a fiscal surplus that allowed the government to prepay outstanding loans and reduce the total debt burden, improving its credit rating outlook.