Oman's fiscal situation is "very stable and improving,” three sources at the sultanate's National Program for Fiscal Balance told Al-Monitor on condition of anonymity. Also known as the Tawazun program, it reports to the Ministry of Finance with a dotted line to the country’s ruler. Sustaining public finance has been a race against the clock since 2020, when Sultan Haitham bin Tarek inherited an indebted state from his predecessor, the late Qaboos bin Said Al Said.

Fitch Ratings upgraded Oman's outlook to "stable" from "negative" in December 2021 to reflect improvements in key fiscal metrics. Interestingly, the rating agency pointed out the high correlation between swings in oil prices and the country’s fiscal health. It estimated that higher hydrocarbon revenues, which grew only by a third, “likely accounted for more than half” of budget deficit narrowing in the fiscal year 2021 to nearly five times less than in 2020.

Non-oil revenues are on a steady upward trajectory, too, helped by recovery from the COVID-19 economic fallout — Oman levies a corporate tax on companies — and introducing a 5% value-added tax in April 2021. The tax is expected to provide the government 450 million Omani riyals in 2022, or about 13.5% of its total non-oil revenues. Plans to launch the gulf’s first income tax on high-net-worth individuals is “still on track,” a source at Tawazun said.

Additional relief might be ahead as the 2022 budget is based on a barrel at $50, well below current oil prices. Tawazun sources estimated "the majority” of extra oil windfall will be allocated to cutting public debt, estimated in 2021 at 68% of gross domestic product. It would contribute to lower government interest payments that increased, on the back of rising public debt, from approximately 35 million riyals in 2014 to nearly 1 billion in 2020.