Oman’s 2025 state budget, published in the official Gazette on January 5, takes a cautious and balanced approach to economic growth, diversification, and financial stability, aligning with Vision 2040. According to the Oman Daily Observer, the budget prioritizes economic diversification by supporting sectors such as tourism, manufacturing, renewable energy, and logistics while maintaining investments in education and healthcare to develop a skilled workforce for long-term growth.
The budget also aims to bring structural changes by reducing reliance on oil revenue, increasing the non-oil sector’s contribution, and improving fiscal stability and credit ratings. One of its primary objectives is to ensure alignment with the financial framework of the 10th five-year plan, supporting financial stability, developmental initiatives, urban development, and continued government subsidies for essential services.
Key assumptions underpinning the budget include an oil price of $60 per barrel and daily production of 1.001 million barrels. However, the 20% reduction in development expenditure compared to 2024 raises concerns about potential long-term economic growth. Additionally, the volatility of global oil prices, geopolitical tensions, and possible changes in OPEC+ production agreements could impact Oman’s oil revenue, which remains a significant portion of the budget.
A projected global economic slowdown in 2025, as estimated by the IMF, may affect Oman’s economy by reducing demand for exports, inward foreign investment, and tourism. Inflationary trends could also influence domestic prices and purchasing power. Geopolitical instability in the Middle East further adds to economic uncertainty, potentially affecting trade, investor confidence, and bilateral relations.
Climate change poses another challenge, potentially increasing infrastructure and disaster management costs while accelerating the global shift toward renewable energy. This transition could impact oil revenue, necessitating new investments in sustainable energy sources.
Despite these challenges, Oman’s 2025 budget remains a prudent framework focused on diversification and sustainable growth. Its success will depend on flexible implementation and continuous monitoring of global economic and geopolitical trends.
