The 2021 budget is the first budget for the Tenth FiveYear Plan (2021-2025), paving the way for implementing Oman ‘Vision 2040’ finalized under the leadership of His Majesty Sultan Haitham Bin Tarik. It also incorporates the objectives of the Medium Term Fiscal Plan (20202024), also referred to as the Fiscal Balance Plan, which has been endorsed by His Majesty the Sultan. The Government endeavors, through the Fiscal Balance Plan, to implement a number of measures and initiatives with the aim to reduce the deficit and to firstly avoid deterioration in credit rating and then help improve it. The 2021 budget targets a more efficient system of fiscal and financial management, which prioritises fiscal balance, economic diversification and sustainability of national income. It’s objectives include targeted rates of domestic and foreign direct investment (FDI).
Furthermore, it seeks to enable the private sector to play a greater role in accelerating economic growth and creating more job opportunities. The 2021 budget’s top priority is to reduce the deficit, which is expected to fall by 47% from the 2020 projected actual deficit of RO 4.2 billion. The deficit, as a percentage of GDP, is expected to be around 8% of GDP in 2021. The Budget further paves the way for Program Based Budget (PBB), and explores innovative means for funding some government projects and services. One of the significant changes in Budget 2021 which helps to reduce government spending is the removal of all Oil and Gas expenditure of Petroleum Development Oman (PDO), pursuant to the incorporation of Energy Development Oman (EDO). The objective is for EDO to finance its share of PDO’s Oil and Gas expenditure on its own without support from the Government.