Oman Cuts Deficit, But Oil Dependence Remains

26 Jul 2019 Issue: 62 / 30 By: Waylon Fairbanks

Despite increasingly precarious economic forecasts, freshly released numbers show Oman significantly cut its budget deficit in 2018 and is on pace for an even bigger fall this year. But the centrality of hydrocarbons in Oman’s economy leaves the country’s fortunes tied to oil prices.

Following several years of troubling fiscal developments, Oman looks to have finally caught a break. Preliminary figures from the government’s National Center for Statistics and Information (NCSI) indicate that the sultanate ran a $6.9bn (OR 2.65bn) deficit in 2018, down from $9.8bn in 2017 and consecutive $12bn+ deficits in 2015 and 2016 (see chart 1).

Oman’s economic situation is still troubling: the IMF estimates the country’s GDP contracted by $2.8bn in dollar terms (down to $79.5bn) between 2018 and 2019, and last year’s deficit still amounts to around 8% of GDP. But on the other hand, the figures do finally indicate some fiscal discipline on Muscat’s part. Oman budgeted for a $7.8bn deficit for 2018 (MEES, 5 January 2018), and though 2018 spending did exceed the budgeted $32.5bn by $2.8bn, bumper revenues of $28.4bn were well in excess of the $24.7bn originally budgeted. (CONTINUED - 1406 WORDS)