Monday 06 / January / 2025
Muscat: Oman’s state budget for 2025 is balanced and maintains support for social aspects, with a positive step towards reducing public debt costs, economic analysts and experts said.
The key positive aspects of the 2025 state budget include maintaining social support for petroleum products, electricity, water, sewage, and waste sectors, as well as the social protection system, said Dr. Dhafir bin Awad Al Shanfari, Chairman of the Economic and Financial Committee in the State Council.
“Additionally, there is good progress in reducing the cost of public debt annually through the restructuring of some lower-cost loans,” he added.
In a statement to Oman News Agency Dr Al Shanfari said that there is significant scope for increasing investment spending with high local content if a financial surplus is achieved during the year. “There is also a need to reinvest the surplus in promising activities to enhance their contribution to GDP and future revenues, targeting sectors such as industry, tourism, fisheries, and logistics,” he added.
He further noted that a specific amount is allocated to enhance job opportunities in the private sector and support the employment of Omanis, along with training programmes.
He expressed hope for a proactive plan to leverage financial surpluses to stimulate the non-oil economy and address job seekers’ challenges, expecting oil prices to average above $70 per barrel, helping to prevent a deficit based on $60 per barrel.
Dr. Mohammed bin Hamid Al Wardi, a member of the State Council, highlighted that the 2025 budget continues the Tenth Five-Year Plan and financial sustainability initiatives amid a global environment of geopolitical tensions and economic uncertainties.
He pointed out that the budget for this year is the last in the Tenth Five-Year Plan, with expenditure reaching OMR11.8 billion, a 1.3% increase compared to the approved 2024 budget.
He further noted that the 2025 budget aims for a growth of 2.7% aided by government spending of OMR 4.4 billion.
“The budget seeks to achieve fiscal and economic balance by reducing public debt, stimulating the economy, and continuing to enhance social services through the social protection system and support for electricity, water, and petroleum products sectors.”
“Additionally, the 2025 budget has the lowest cost for public debt service compared to previous budgets, at OMR915 million,” he further added.
Dr. Khalid bin Said Al Amri, Chairman of the Oman Economic Society, said that the 2025 state budget estimates revenues at OMR 11.18 billion, a marginal increase compared to the 2024 budget. “The budget heavily relies on oil revenues, constituting more than 50%, and gas revenues at about 16%, with oil and gas revenues making up over 70% of the total revenues in the 2025 state budget.” “The new year’s budget expenditure is OMR11.8 billion, a slight increase from 2024, while the projected deficit for 2025 is OMR620 million, equivalent to 5.5% of total revenues, compared to a surplus in 2024,” he further said.
He pointed out that the 2025 state budget has allocated about OMR5 billion for social spending, representing approximately 42% of total expenditure. Investment in social services, especially education and health sectors, is crucial, with plans for over 22 new government schools and several healthcare projects.
“The oil and gas sector plays a pivotal role, contributing significantly to the gross domestic product (GDP). The public debt-to-GDP ratio currently stands at 34%, expected to be within the acceptable range of 35-37% this year. The deficit is projected at 5.5% of public revenues, to be financed through internal and external borrowing and drawing from reserves, amounting to about OMR4 billion.”
Dr. Al Amri highlighted that the 2025 budget expenditure is estimated at OMR11.8 billion, with a significant portion directed towards social services OMR5 billion and OMR3 billion for defence and security. Public debt service costs have decreased to over OMR1 billion. The government’s clear efforts in economic diversification were evident in the 2024 state budget and should continue this year.
Dr. Yusuf bin Ali Al Balushi, an economic expert, stated that the 2025 budget is relatively balanced, focusing on social aspects, expanding the social protection umbrella, completing infrastructure, and promoting investments in various economic areas.
He noted the reassuring reduction in public debt service costs to around OMR900 million, an improvement compared to the previous year, and the enhancement of Oman’s credit rating to a positive investment grade, boosting the economy’s strength and attracting investments.
He emphasised the need to focus on broader economic aspects, such as local investments and the private sector’s role, leveraging Oman’s strategic location, mineral resources, and tourism potential. There is a need to redirect spending to align with global changes, particularly in automation and the increased role of technology.
