Public Spending Increases Amid Declining Oil Revenues: Implications for Investors and Businesses in Oman
MUSCAT: Oman experienced a 2% increase in public spending by the end of the third quarter of 2025, despite an 8% decline in state revenues, according to the latest Financial Performance Bulletin from the Ministry of Finance. Total revenues amounted to RO 8.481 billion, a decrease from RO 9.198 billion in the previous year, primarily attributed to lower oil earnings.
Net oil revenues fell by 13%, reaching RO 4.710 billion, down from RO 5.436 billion in the same period of 2024. The ministry identified this decline as a result of decreased crude prices and reduced production levels. Additionally, gas revenues decreased slightly by 4%, totaling RO 1.296 billion, which reflects the collection methodology utilized by the Integrated Gas Company.
Conversely, current revenues increased by RO 50 million, reaching RO 2.449 billion compared to RO 2.399 billion last year.
Government expenditure rose to RO 8.914 billion, largely driven by a substantial 31% increase in development expenditure, which surged by RO 263 million year-on-year. Current expenditures also saw a modest rise of RO 75 million, amounting to RO 6.227 billion.
Development spending by ministries and civil units hit RO 1.103 billion, exceeding the 2025 allocation ceiling by 23%. This overspend is attributed to an accelerated focus on ongoing infrastructure and development initiatives. Meanwhile, contributions and other expenses declined to RO 1.583 billion, down by RO 148 million from the previous year.
Significant subsidy commitments included RO 378 million for the electricity sector, RO 424 million for the social protection system, and RO 55 million for support of petroleum products. An additional RO 300 million was allocated for debt repayments.
Spending on social and basic services totaled RO 3.817 billion, with 37% directed toward education, 26% to health, another 26% for social security and welfare, and 11% for housing-related programs.
The Ministry of Finance confirmed disbursements of RO 1.225 billion to private-sector entities, adhering to its policy of settling invoices with complete documentation within an average of five working days.
As of the end of the third quarter, Oman’s public debt stood at RO 14.7 billion, an increase from RO 14.4 billion in the same period of 2024. This rise is linked to the refinancing of maturing domestic debt instruments and the proactive management of obligations due later in the year. The government continues to enhance the local debt market by issuing sovereign sukuk and development bonds to strengthen the national yield curve. — ONA
Special Analysis by Omanet | Navigate Oman’s Market
The recent 2% rise in public spending amid an 8% drop in state revenues signals a pivot for businesses in Oman, highlighting the impact of declining oil revenues on fiscal policy. This creates opportunities for sectors involved in infrastructure and social services, driven by the 31% increase in development expenditure, while also posing risks related to the government’s reliance on fiscal maneuvering to meet obligations.
Smart investors should consider positioning themselves in industries aligned with government priorities, particularly in education, health, and social security, while also being mindful of the implications of rising public debt and fluctuating global oil prices.
