Saturday 04 / January / 2025
Muscat: Sultan bin Salim Al Habsi, Minister of Finance stated that the 2025 budget was prepared according to an approach that enables the government to maintain continued financial, economic and social stability.
He affirmed that the government continues to improve public finance indicators and achieve financial sustainability, and is committed to maintaining the level of spending on basic services.
He confirmed that the government continues to provide subsidy for electricity, water, wastewater, fuel, basic food commodities, and others, in addition to social and insurance programs and benefits.
This was unveiled during the media briefing on the 2025 budget held by the Ministry of Finance in Muscat today.
The minister said in his speech that the estimates of the state's general budget for the year 2025 were developed following joint work with the competent authorities of the State's Administrative Apparatus.
He added that the estimates were also based on key factors and data, with the total public revenues estimated at about OMR11.180 billion, based on an average oil barrel price of OMR60, an increase of 1.5 percent over the estimated revenues for 2024.
Al Habsi pointed out that oil revenues constitute 52 percent of the total revenues, while the gas sector's contribution is 16 percent, and non-oil revenues represent 32 percent of total public revenues.
The minister added that with regard to public spending, it was estimated in the state’s general budget for the year 2025 at an amount of OMR11.800 billion, an increase of about OMR150 million over the public spending approved in the 2024 budget.
He pointed out that according to these estimates, the 2025 budget included an estimated deficit of OMR620 million, which will be financed by borrowing OMR220 million, in addition to withdrawing OMR400 million from reserves.
The Minister of Finance said that the state's general budget for the year 2025 included financial allocations for social services amounting to about OMR5.004 billion, distributed across education, health, housing and social welfare sectors, an increase of 4.2 percent over the allocations approved in 2024.
In response to journalists’ questions, the minister announced that funds have been allocated in the 2025 budget to promote 2015-2016 senior employees, adding that 4,000 jobs will be available in the education sector in 2025.
Al Habsi added that in continuation of the policy of curbing inflation and keeping it at low levels, the State's General Budget for the fiscal year 2025 included financial allocations for subsidy amounting to OMR1.580 billion, of which OMR577 million allocated to the Social Protection Scheme, OMR520 million allocated to subsidy for the electricity sector, and OMR194 million allocated to subsidy for the water and wastewater sector.
Additionally, OMR82 million allocated to subsidy for the transportation sector, OMR73 million allocated to support the interests of development and housing loans, and an amount of OMR59 million to support the waste sector, while the remaining subsidy allocations are distributed to support petroleum products, food commodities, among others.
The Minister of Finance explained that in order to enhance decentralised development in the governorates in accordance with the Royal Directives in this regard, an amount of OMR20 million was allocated to each governorate during the years of the 10th five-year plan, with a total of OMR220 million, the total amount actually committed from the approved amount has reached OMR147 million, at a rate of 68 percent until the end of 2024.
The minister affirmed that the State’s General Budget for the year 2025 gave importance to the Development Bank’s continued financing of value-added projects by raising the loan portfolio and increasing the level of lending by approving an amount of OMR80 million to raise the bank’s capital for the year 2025.
In this regard, he pointed out that the total number of outstanding loans at the Development Bank until the end of 2024 stands at more than 22,000 loans. He added that the bank’s portfolio until November 2024 stood at more than OMR277 million, an increase of 34 percent over the size of the portfolio at the end of June 2023.
The Minister of Finance further said that with regard to the (Iskan) programme, which was launched in partnership with Oman Housing Bank during the past year, the bank’s lending portfolio grew by 23 percent by the end of December 2024 compared to December 2022, as the size of the portfolio stood at more than OMR855 million.
He explained that the approved data indicate the gross domestic product (GDP) at constant prices grew by 1.9 percent until the end of the third quarter of 2024, recording about OMR28.146 billion, compared to OMR27.632 billion at the end of the same period in 2023.
Regarding inflation, the minister said that data from the National Centre for Statistics and Information (NCSI) indicate that the inflation rate in the Sultanate of Oman until November 2024 stood at about 0.6 percent, compared to about 1.1 percent for the same period in 2023. The continued low inflation rates are attributed to government policies to control prices through several measures, including support for petroleum products, electricity and water support, as well as support for the prices of basic commodities.
As for foreign direct investments (FDI), the minister explained that as a result of the government’s efforts to streamline procedures and adhere to the programmes it announced over the past years, from the beginning of the current five-year plan, preliminary data shows that the volume of FDI in the Sultanate of Oman stood at OMR26.677 billion by the end of the third quarter of 2024, an increase of 16 percent compared to the same period in 2023.
After that, Abdullah bin Salim Al Harthy, Undersecretary of the Ministry of Finance, presented a visual presentation in which he highlighted the prominent financial, economic and monetary indicators and the preliminary results of the State’s General Budget for the fiscal year 2024 and the 2025 budget, as well as potential financial and economic risks, and projects and initiatives to develop the state’s public finance management.
The undersecretary said that global oil price forecasts indicate that average prices, according to international agencies’ forecasts, during the year 2025, will range between $70-80 per barrel.
Al Harthy added that the GDP of the Sultanate of Oman at constant prices is expected to grow by the end of 2024 to about OMR38.390 billion and in 2025 to about OMR39.426 billion.
He explained that the financial and economic objectives of the 2025 budget are to maintain the level of basic social services provided by the government, continue the level of government subsidy for electricity, water, fuel and food commodities, support the urban growth, provide the opportunity for a greater number of citizens to own homes, and continue the government plan to enable the National Employment Programme and provide insurance coverage and fair social protection for various segments of society.
Al Harthy pointed out that items of the estimated public spending for the year 2025 are OMR8.555 billion as current expenses, about OMR900 million for development expenses, and about OMR2.345 billion for contributions and other expenses, which constitute 20 percent of total public spending.
He stressed that the State's General Budget for the fiscal year 2025 seeks to maintain financial, economic and social stability in line with the financial framework of the 10th five-year Development Plan (2021-2025) and Oman Vision 2040 and achieve a set of economic and social goals.
He said that the general budget for 2025 has allocated about OMR5 billion for spending on the social and basic sectors, an increase of 4.2 percent compared to the approved budget for 2024 of about OMR4.8 billion.
The undersecretary further said that spending on the social and basic sectors constitutes 42 percent of the total public spending approved in the 2025 budget, distributed as follows: 24 percent for the health sector, 9 percent for the housing sector, 28 percent for social security and welfare, and 39 percent for the education sector.
He confirmed that the total dues paid to private sector companies in the Sultanate of Oman until the end of 2024 stood at OMR1.631 billion.
With regard to supporting initiatives to employ jobseekers in the private sector, development expenditure in the approved budget for 2025 has allocated about OMR50 million to support initiatives to employ jobseekers in the private sector, in addition to the amounts collected from transferring 1.2 percent of the value of purchase invoices for the oil and gas sectors, government units, and companies affiliated with Oman Investment Authority.
As for the the Governorates Development Programme, Al Harthy stressed that the Royal Directives stipulated increasing the financial allocations for the same programme from OMR10 million to OMR20 million for each governorate during the 10th five-year Development Plan; to implement the strategic programmes for the sustainable development of governorates and cities, and to stimulate the comparative competitive advantages of the governorates.
On the other hand, he indicated that the preliminary results of the financial performance for the year 2024 indicate posting a surplus of about OMR540 million compared to the estimated deficit in the State’s General Budget for the fiscal year 2024 of about OMR640 million.
He added that the state's general revenues in 2024 rose to OMR12.674 billion, compared to what was approved in the budget for the same year, which amounted to OMR11.010 billion.
He further said that the average oil price reached $82 per barrel, compared to $60 per barrel approved in the 2024 budget, while public spending stood at about OMR12.134 billion, compared to the approved OMR11.650 billion.
He added that about OMR468 million of the total additional financial revenues were channelled to enhance social spending and stimulate economic growth, distributed as follows: OMR176 million to enhance allocations for support of petroleum products, OMR125 million to enhance allocations for support of the electricity, water, wastewater and waste sectors, OMR50 million to enhance the allocations of the Ministry of Social Development for beneficiaries of social security families, low-income families, OMR111 million to enhance the budget of the health and education sectors to meet the needs of expanding services, and OMR6 million to exempt 532 loans of small and medium enterprises from the Development Bank and the Authority for Small and Medium Enterprises Development for the year 2024.
He pointed out that the public debt file in the Sultanate of Oman has witnessed positive developments, thanks to the continued implementation of many government measures and initiatives that have contributed to rationalising and raising the efficiency of spending, and increasing non-oil government revenues, in addition to the rise in oil prices, which provided an opportunity to adopt a policy of channelling part of the additional revenues to cut down the size of the public debt, and replacing high-cost government loans with lower-cost ones.
Al Harthy said that the Ministry of Finance is committed to paying the public debt dues according to the approved borrowing plan as follows: paying off OMR355 million of external loans before their due date, paying off RO 600 million of government development bonds and local bonds due, and issuing government development bonds and Ijarah bonds with a total value of OMR705 million in line with the approved borrowing plan.
He added that the preliminary results of the financial performance for the year 2024 indicate a decrease in the size of the public debt by about OMR800 million, to reach OMR14.4 billion from OMR15.2 billion at the beginning of 2024. He said that the ratio of public debt to GDP declined to 34 percent. Public debt service decreased to about OMR940 million compared to the approved budget for 2024 by about OMR1.050 billion.
Abdullah bin Salim Al Harthy, Undersecretary of the Ministry of Finance affirmed that the ministry will begin implementing the pilot operation of the unified government financial system "Maliya" with some government institutions, so that the system will be actually implemented in early 2026 with the launch of the 11th five-year Development Plan, and the implementation will be completed by 2030. The new system will establish a unified government portal for all supporting government financial systems. It is a modern electronic system for managing public finances in the Sultanate of Oman, used in planning, implementation, monitoring and issuing reports related to the state's general budget, and developing the state's public finance management to achieve the effective and optimal use of financial resources in line with the Oman Vision 2040.
