Oman maintains fiscal discipline in Q1 amidst lower oil revenue
During the first quarter of 2025, total public revenue reached RO 2.635 billion. This represented a year-on-year decline of seven per cent compared to the RO 2.826 billion recorded in the same period of 2024. The decline was driven primarily by a reduction in oil and gas revenue. Net oil revenue stood at RO 1.468 billion, falling by 13 per cent from RO 1.688 billion a year earlier. Net gas revenue also declined marginally by two per cent to RO 436 million, down from RO 444 million.
In contrast, current revenue increased by five per cent to RO 725 million, compared to RO 691 million in the same period last year.
Despite revenue pressures, public spending rose to RO 2.771 billion, a four per cent increase compared to RO 2.664 billion in the first quarter of 2024. The increase is attributed to a strong rise in development expenditure, which grew by 27 per cent to RO 254 million. Meanwhile, current expenditure slightly decreased by one per cent to RO 1.967 billion.
The government also allocated RO 490 million towards contributions and other expenses, including RO 144 million for the social protection system and RO 27 million in fuel subsidies. Additionally, RO 100 million was allocated to the budget line designated for future debt obligations.
Spending on social sectors and basic services totalled RO 1.668 billion by the end of March 2025. This amount represented 40 per cent of total public spending. Of this allocation, 52 per cent was directed towards social welfare and security, twenty-five per cent towards education, sixteen per cent towards health services and seven per cent towards housing.
The Ministry of Finance also maintained strong support for the private sector by paying more than RO 304 million to suppliers and contractors through the government's financial system. These payments were made within an average of five working days after the submission of complete documentation, reflecting the government's reliability and efficiency in fulfilling its financial obligations.
Public debt declined to RO 14.3 billion at the end of the first quarter of 2025, compared to RO 15.1 billion in the same period of 2024. The Ministry attributed this reduction to the proactive repayment of outstanding financial obligations.
To address financing needs for 2025, the government has announced a borrowing plan of RO 2.454 billion. This includes RO 1.836 billion to cover maturing debt instalments and RO 620 million to finance the anticipated fiscal deficit. The government aims to meet these requirements through a mix of Government Development Bonds and Local Sovereign Sukuk, with a total issuance value of RO 750 million planned across the year. This strategy is designed to ensure funding at sustainable cost and risk levels.
The financing plan also supports three key objectives: enhancing the domestic debt market, diversifying investor participation and mitigating risks associated with public debt.
According to the International Monetary Fund's April 2025 World Economic Outlook, global economic growth is projected to slow to 2.8 per cent in 2025. The global inflation rate is expected to ease to 4.2 per cent. Oil prices are forecast to average $66 per barrel in 2025, down from $73 per barrel during Oman's first quarter.
Despite external headwinds, the Omani economy continued to expand. The gross domestic product at constant prices grew by 1.7 per cent in 2024, reaching RO 38.305 billion, up from RO 37.674 billion in 2023, according to the National Centre for Statistics and Information.
Oman's first quarter fiscal performance reflects a government focused on stability, resilience and forward-looking reforms. With increased investments in development and social sectors, accelerated debt reduction and timely payments to the private sector, the government remains aligned with the goals of Oman Vision 2040. Despite global uncertainties, the Sultanate of Oman is maintaining a steady course towards sustainable growth and economic diversification.
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