DUBAI: Oman is forecasting a 1.3 billion rial ($3.39 billion) deficit in its 2023 budget, or 3% of gross domestic product, following an expected surplus this year after higher oil prices boosted revenues.

State media reported the Gulf state expects revenues of 11.7 billion rials and expenditure at 13 billion rials next year, based on an average oil price assumption of $55 per barrel.

Budgeted spending next year is 7% above the approved spending for 2022, state media reported, citing the finance ministry.

For 2022, the government is estimating a fiscal surplus of 1.15 billion rials, with revenues at 14.2 billion rials and spending at 13.9 billion rials - estimating the average oil price this year at $94/barrel.

Oman, one of the Gulf’s weaker economies, swung to a budget surplus in the first half of 2022, easing pressure on public finances and improving its ability to meet debt obligations.

The IMF expects Oman to post fiscal and external surpluses in 2022 and over the medium term, due mainly to higher oil revenue, fiscal discipline and the introduction of value added tax.

Last month, S&P Global upgraded Oman’s credit rating to BB, from BB-, on improved fiscal performance and lower public debt.

While oil prices have softened in recent weeks after highs of over $100/barrel over the course of this year, Oman’s oil price assumption for its 2023 budget appears conservative.

Goldman Sachs, in a note dated Dec. 12, sees Brent crude averaging $83 per barrel over the next five years as its base case scenario.