Oman has posted a fiscal deficit for the first three months of this year and it is resorting to borrowing to maintain a balanced budget in 2025.
The sultanate posted a deficit of OR136 million ($352 million) for the first three months of 2025, which is 16 percent lower than the deficit of the same quarter last year.
Revenue for this year’s quarter dropped 7 percent year on year to $6.8 billion.
“This decline is primarily attributed to a reduction in hydrocarbon revenues,” the Ministry of Finance said in its quarterly fiscal report.
Oil and gas exports fell to $9.6 billion in the first three months of this year, from $11.4 billion the same time last year. While the government controls the majority of the oil and gas sector, international investors control have a stake of around a third.
Oman sold its crude oil at an average price of $73 per barrel in the first three months of this year down from $83 per barrel in the first quarter of 2024, the report said.
Oman’s oil breakeven price is $57 per barrel, according to International Monetary Fund estimates.
The overall government’s debt stands at $37 billion. The ministry report says that the government will need to borrow $6.4 billion this year to balance the 2025 budget.
“This plan outlines the status of public debt, financing needs and the financing plan for the year.”
Part of its debt paying plan this year is to raise $1.94 billion from government development bonds and local sovereign sukuk.
The first sukuk of $260 million, with a seven-year maturity period, will be issued on June 5. It will have an annual interest rate of 4.65 percent with a maturity date of June 4 2032.
Analysts say Oman stands to capitalise from funds raised through sukuk and bonds for its civil projects.
“The money raised from the investors would come handy for the government to finance its most pressing projects such as infrastructural projects already under plans,” said Saud Al-Hashmi, managing director of Muscat-based Capital Investments. Oman forecast a fiscal deficit of $1.6 billion for its 2025 budget from $1.7 billion last year. It posted a surplus of $1.4 billion in 2024 as it sold oil at an average price of $82 per barrel.
