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RIYADH: Oman’s public revenue saw an annual decline of 2 percent in the second quarter of 2024, reaching $16.10 billion, according to the country’s news agency.

This reduction, primarily driven by decreases in net gas revenue and current earnings, reflects the broader economic adjustments the sultanate is making in response to evolving fiscal conditions, the report said.

Oman’s economic landscape is heavily influenced by its reliance on oil and gas revenues, making it vulnerable to global price fluctuations. The government has been actively working to diversify the economy and reduce dependence on hydrocarbons as part of its Vision 2040 plan. 

This strategic vision aims to foster economic diversification, encourage private sector growth, and enhance social welfare programs to ensure long-term resilience, the Oman News Agency reported.

Despite the overall decline, Oman’s oil sector remains a strong contributor to the economy. Net revenue from the industry increased by 3 percent to $8.73 billion, up from $8.46 billion a year earlier.

This growth, supported by an average oil price of $82 per barrel and a production rate of just over 1 million barrels per day, highlights the effective management of oil revenues by Energy Development Oman, ensuring steady cash flow and financial stability.

In contrast, net gas revenue experienced a significant drop, falling by 15 percent to $2.45 billion, a result of changes in the revenue collection methodology. 

Current earnings also decreased slightly, amounting to $4.88 billion, a decline of $208 million compared to the same period last year.

Oman’s public spending, meanwhile, increased to $15.09 billion by the end of the second quarter of 2024, marking a 2 percent rise from the previous year.

This increase is partly due to heightened investment in development projects and expanded social protection programs.

Development expenditure for civil ministries and units reached $1.30 billion, representing 56 percent of the $2.34 billion allocated for the year.

Contributions and other expenses surged by 40 percent to $2.82 billion, primarily driven by the implementation of the social protection system, which plays a key role in enhancing economic security for citizens.

In a positive fiscal move, Oman reduced its public debt to $37.61 billion by the end of the second quarter of 2024, down from $42.54 billion a year earlier. 

Additionally, the Ministry of Finance processed over $1.46 billion in payments to the private sector through the e-financial system, reflecting the government’s commitment to supporting economic activity and maintaining financial stability.

Concurrently, Oman is facing moderate inflationary pressures, with the inflation rate rising by 1.5 percent in July compared to the same month in 2023. 

This increase is largely driven by higher prices in essential categories, particularly a 4.5 percent rise in food and non-alcoholic beverages. Other sectors, such as health, housing, and various goods and services, also saw price hikes.

Regionally, inflation varied, with North Al Sharqiyah Governorate recording the highest rate at 2.3 percent, followed closely by South Al Sharqiyah, Musandam, and Al Wusta Governorates. Even Muscat, typically more stable, experienced a 1.2 percent increase.

These developments occur against a backdrop of global economic uncertainty, characterized by volatile commodity prices and disrupted supply chains. 

Oman’s government is actively responding by focusing on revenue diversification, prudent fiscal management, and the expansion of social protection measures, aiming to ensure long-term economic stability and resilience. 

In the regional context, Oman’s economic strategies align with those of its Gulf Cooperation Council neighbors, who are also seeking to diversify their economies and reduce reliance on oil revenues.