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Omani Budget Surplus Increases 26% with Growth of Oil Revenues

The Omani state budget surplus increased by about 26 percent on an annual basis in the first quarter of 2023. (Asharq Al-Awsat)
The Omani state budget surplus increased by about 26 percent on an annual basis in the first quarter of 2023. (Asharq Al-Awsat)
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Omani Budget Surplus Increases 26% with Growth of Oil Revenues

The Omani state budget surplus increased by about 26 percent on an annual basis in the first quarter of 2023. (Asharq Al-Awsat)
The Omani state budget surplus increased by about 26 percent on an annual basis in the first quarter of 2023. (Asharq Al-Awsat)

The Sultanate of Oman announced, on Tuesday, that its public budget surplus increased by about 26 percent on an annual basis in the first quarter of 2023, with the growth of its net oil revenues.

The Omani Ministry of Finance said in a report that the general budget recorded a surplus of about 450 million riyals ($1.2 billion) at the end of the first quarter of 2023, compared to a surplus of 357 million riyals in the same period of 2022.

It added that the Sultanate’s total revenues increased by 6 percent to reach 3.2 billion riyals in the first three months of the year, compared to 3.02 billion a year ago, while spending rose 4 percent to 2.767 billion riyals from 2.6 billion.

Data from the Ministry of Finance showed an increase in net oil revenues by 9 percent to about 1.7 billion riyals, while net gas revenues decreased by 12 percent to 720 million riyals. The ministry attributed the growth of oil revenues, which accounted for about 53 percent of total revenues, to the rise in the average price of a barrel of crude and the average production.

According to the statement of the Ministry of Finance, the current collected revenues until the end of the first quarter increased to reach 787 million riyals, compared to 636 million riyals in the same period in 2022.

The current expenditures of the civil ministries amounted to about 1.3 billion riyals, compared to 954 million riyals in the first quarter of 2022, while the development expenditures of the ministries and civil units amounted to 117 million riyals.

The total contributions and other expenditures amounted to about 273 million riyals, up by 53 percent, compared to 179 million riyals for the same period last year.

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Lebanon's Bonds Soar as Traders Place Counterintuitive Bets

The Lebanese national flag flutters in Beirut, Lebanon, August 18, 2020. (Reuters)
The Lebanese national flag flutters in Beirut, Lebanon, August 18, 2020. (Reuters)
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Lebanon's Bonds Soar as Traders Place Counterintuitive Bets

The Lebanese national flag flutters in Beirut, Lebanon, August 18, 2020. (Reuters)
The Lebanese national flag flutters in Beirut, Lebanon, August 18, 2020. (Reuters)

Israel's airstrikes in Lebanon are inflicting destruction that could set its economy back by years.

But the defaulted country's bonds have climbed to two-year highs, gaining a whopping 44% since late September, as traders snap them up for pennies on the dollar.

Investors reckon the weakening of Hezbollah could precipitate a shake-up of Lebanon's fractured political system and potentially an economic plan to pull the country out of default, according to Reuters.

"The reason bonds have rallied is that the market thinks that the Lebanese political class might finally be able to agree a political path forward and an economic reform plan without Hezbollah in the picture," said Anthony Symond at abrdn.

"This would pave the way for the Eurobonds to eventually be restructured."

The jump still leaves Lebanon's dollar bond maturing in 2025 trading at a paltry 8.5 cents on the dollar - a fraction of the 70-cent level at which bonds are considered distressed.

Lebanon tumbled into default in the spring of 2020 after the country's financial system plunged into a deep economic crisis in 2019. With an effectively non-functioning government wracked by discord and corruption, few expect a debt deal anytime soon.

"Lebanese bonds started getting bids after the death of Nasrallah," said Kaan Nazli, a portfolio manager with Neuberger Berman, referring to Hezbollah leader Sayyed Hassan Nasrallah, whose death was announced on Sept. 28.

"Lebanon was in the 'it could not get worse' category," said Nazli, adding that the latest events could spark change.

Bruno Gennari, emerging markets strategist with KNG Securities, said rumors that Washington could use Hezbollah setbacks to push Lebanon to appoint its first president in two years had given hope.

"Is all about Hezbollah getting weaker," he said.

S&P Global Ratings said last week Israel's military action in Lebanon "put severe pressure" on Lebanon's already battered economy, and would "further delay economic and financial reforms, and the longer-term recovery of fiscal and external accounts."

S&P has a selective default rating on Lebanon's foreign currency debt.

Given their incredibly low prices, any glimmers of good news could boost Lebanon's bonds again, Nazli said

"If you see any headline on a presidential election, or even just a schedule for one - that could be a sign that things are moving forward," he said.