Analysis of Oman’s State Budget 2025

Oil and gas revenues represent 68% of total government revenues

Oil and gas revenues are budgeted at OMR 7.6 billion, representing a 1.6% increase compared to the 2024 budget of OMR 7.4 billion. 

The oil revenue, budgeted at OMR 5.8 billion, represents a 1.4% decrease compared to the 2024 budget of OMR 5.9 billion. While the 2025 budget assumes an average oil price of USD 60/bbl, which is the same as the 2024 budget, it assumes average oil production of 1,001 thousand barrels per day, representing a 2.9% decrease compared to the 2024 budget of 1,031 thousand barrels per day. 

The gas revenue, budgeted at OMR 1.7 billion, represents a 12.8% increase compared to the 2024 budget of OMR 1.6 billion. This increase is attributable to the increase in the quantities of gas sold and increase in the domestic selling price of gas. 

The oil and gas revenues budgeted at OMR 7.6 billion for 2025 represents a 16.9% decrease compared to the 2024 preliminary  results of OMR 9.2 billion. Oil revenues are lower because the 2025 budget assumes an average oil price of USD 60/bbl which is significantly lower than the average oil price realized in the 2024 preliminary results (USD 82/bbl).

Non-oil and gas revenues represent 32% of total government revenues

Non-oil and gas revenues, budgeted at OMR 3.57 billion, represent a 1.5% increase compared to the 2024 budget of OMR 3.52 billion, and a 1.5% increase compared to the 2024  preliminary results of OMR 3.52 billion. The change in composition of total government revenues oil and gas versus non-oil and gas revenues since 2017 reflects the government’s continued focus on economic diversification. 

The optimistic projection of non-oil and gas revenue in 2025 budget is based on an anticipation of higher tax and fee revenues resulting from the recovery of economic activities. The 2025 budget estimates that VAT and Excise Tax revenues at OMR 680 million will increase by 5% compared to the 2024 budget of OMR 645 million. Similarly, Corporate Income Tax revenues at OMR 656 million will increase by 4% compared to the 2024 budget of OMR 630 million. The 2025 budget does not envisage any revenues from Personal Income Tax, which was identified as a source of economic diversification in the Medium- Term Fiscal Plan.

Dividends from Oman Investment Authority (OIA) continue to be another significant source of non-oil and gas revenues (OMR 800 million) for the government. 

Development expenditure cut by 29% compared to the 2024 preliminary results

The 2025 budget estimates development expenditure for civil ministries at OMR 900 million – which is the same as the 2024 budget, but 29% lower compared to the 2024 preliminary results of OMR 1.2 billion.

Expenses for servicing public debt cut by 12.9% compared to the 2024 budget

The 2025 budget estimates expenses for servicing public debt at OMR 0.9 billion, representing a 12.9% decline compared to the 2024 budget of OMR 1.1 billion.

Electricity subsidy increased by 13% compared to the 2024 budget

The 2025 budget estimates expenses for electricity subsidy at OMR 520 million, representing a 13% increase compared to the 2024 budget of OMR 460 million.

Expenses of civil ministries and government units increased by 2.6% compared to the 2024 budget

The 2025 budget estimates expenses of civil ministries and government units at OMR 4.6 billion, representing a 2.6% increase compared to the 2024 budget of OMR 4.5 billion.

The 2025 budget estimates contribution to local, regional and international institutions at OMR 85 million, representing a 113% increase compared to the 2024 budget of OMR 40 million.

The 2025 budget estimates provision for debt settlement at OMR 440 million, representing a 10% increase compared to the 2024 budget of OMR 400 million.

The 2025 budget deficit is estimated at OMR 620 million, representing a 3% decline compared to the 2024 budget of OMR 640 million. This is OMR 1.2 billion lower than the surplus of OMR 540 million as per the 2024 preliminary results. The 2025 deficit is proposed to be financed through external and domestic borrowing (OMR 220 million or 35%) and drawing on reserves (OMR 400 million or 65%).

Oil and gas revenues estimated in the 2025 budget are 7.9% higher compared to the Tenth-Five Year Development Plan. The increase in oil revenue assuming a higher oil price (USD 60/bbl in the 2025 budget compared to USD 50/bbl in the Tenth-Five Year Development Plan) partially compensates for the decline in gas revenue (OMR 1.7 billion in the 2025 budget compared to OMR 2.3 billion in the Tenth-Five Year Development Plan).

Non-oil and gas revenues estimated in the 2025 budget are 20% lower compared to the Tenth-Five Year Development Plan.

With regard to expenditure, the removal of gas procurement expenditure is offset by the increase in subsidies and the inclusion of new expenses.

A decline in revenue, coupled with an increase in expenditure, has resulted in a deficit of OMR 620 million in the 2025 budget, which is over ten times the surplus of OMR 65 million budgeted in the Tenth-Five Year Development Plan.