The Sultanate of Oman has released its 2025 state budget, aligning with the ambitious goals set forth by Oman Vision 2040 and aiming to bolster economic stability amid fluctuated financial landscapes. The plan lays down economic growth objectives, with hopes of achieving at least 3% growth, as it navigates through uncertainties including volatile oil prices and pressing climate concerns.
This budget recognizes the necessity for financial sustainability, focusing on enhancing institutional performance through digital transformation programs, and supporting government employment plans across both public and private sectors. There is also emphasis on maintaining basic governmental social services, ensuring fair social protection, and offering subsidies for key utilities and services to diverse segments of the society.
The budget highlights specific figures: oil and gas revenues account for 68% of total government revenues, with projected oil revenue set at OMR 5.8 billion for 2025, albeit slightly lower than the previous year’s expectations. The budget anticipates average oil prices to stabilize at USD 60 per barrel, the same as for 2024.
Oil revenues, factored at OMR 5.8 billion, reflect a decrease from OMR 5.9 billion projected for 2024. Conversely, gas revenues, budgeted at OMR 1.7 billion, see notable growth due to increased domestic sales dynamics and pricing mechanisms. Interestingly, the total oil and gas revenues reflect a drop of 16.9% when compared to the preliminary results of OMR 9.2 billion from 2024.
On the other side, the non-oil and gas revenue segment indicates growth, projected at OMR 3.57 billion for 2025, marking a 1.5% increase. The government's efforts for economic diversification are underlined by positive expectations for VAT and excise tax revenues, which are anticipated to rise to OMR 680 million.
Development expenditures are adjusted to reflect financial realities, estimated at OMR 900 million for the civil ministries. While this amount remains consistent with 2024, it is nevertheless 29% lower than previous preliminary results of OMR 1.2 billion. This decision reflects challenges faced by the government amid global fiscal constraints.
Reflecting austerity, debt servicing expenses are estimated to fall by 12.9%, affirming the government's strategy to impose fiscal discipline. Despite the cuts, the budget has allocated OMR 520 million for electricity subsidies, increasing this expense by 13% compared to the last year’s budget.
Looking toward the future, the budget deficit is now expected to reach OMR 620 million, which is slightly lower than the OMR 640 million deficit budgeted for 2024. This deficit is estimated to be financed through borrowing and reserve withdrawals, with OMR 220 million sourced externally and OMR 400 million drawn from reserves.
With projections indicating oil revenues are 7.9% higher than expected within the Tenth Five-Year Development Plan, the government maintains hope. Nevertheless, non-oil and gas revenues are set to be 20% lower compared to earlier forecasts. This disparity hints at the difficulties faced during the diversification efforts outlined under the Medium-Term Fiscal Plan.
Through this comprehensive budget framework, Oman aims to solidify its economic foundations and tackle the financial challenges posed by the current global economic climate. While ambitions are high, the government faces the challenge of balancing between sustaining its core revenues from oil and gas, and promoting growth through diverse economic channels.
This nuanced approach by the government reflects an adaptive economy responding to both domestic and global pressures, including oil market fluctuations and socio-economic needs of its citizens. The commitment to fiscal prudence should aid Oman to navigate these tough waters, as it strives to fulfill the aspirations outlined within Oman Vision 2040.