Oman set to see balanced budgets from 2023

SPENDING RESTRAINT: GCC states are expected to keep their spending flat or slightly higher this year despite the uptick in oil prices

With rising oil prices helping whittle down a debt burden presently equal to as much as 50 per cent of GDP, the Sultanate will likely see balanced budgets from 2023 onwards, according to an economist of the State General Reserve Fund (SGRF), a sovereign wealth fund of the Sultanate of Oman.

Samra al Harthy (pictured), Acting Senior Manager — Economic Research, attributed the positive outlook to, among other things, expectations that oil prices will remain stable on the back of a sustained joint Opec / non-opec effort to rebalance oil markets. Restrained spending, coupled with the introduction of new revenue streams like Value Added Tax (VAT), are also key factors, she noted.

Samra offered the assessment during a presentation of the theme, ‘OMAN/GCC Regional Economic Outlook’, at the Oman Debt Capital Markets Conference held in Muscat on Wednesday. The day-long event was organised by The Gulf Bond and Sukuk Association (GBSA) in collaboration with Oman’s Capital Market Authority (CMA).

The economist characterized 2018 as a “Year of Improvements” capping three years of fiscal turbulence kicked off by the collapse in international oil prices in 2014.

“The past three years have, no doubt, been testing and challenging times for the region’s policymakers,” said Samra. “This has been a region that grew accustomed to high oil revenues, fiscal and current account surpluses, and stable financial conditions, and almost overnight the region found itself having to deal with new challenges and problems.”

Between 2015 and 2017, the GCC region accumulated over $350 billion in fiscal deficit, $76 billion in current account deficits, over $270 billion in foreign exchange losses, and an over $200 billion drop in governments’ financial net worth, she pointed out.

But the tide has been turning, Samra noted. Citing the International