Oman said on Sunday that it anticipates its budget deficit to reach 5% of GDP in 2022, comfortably within the parameters of a medium-term fiscal plan established by the Gulf state last year to address its deeply leveraged finances.

Oman, a relatively modest crude producer, is more vulnerable to oil price swings than its hydrocarbon-rich Gulf neighbors, which means it was particularly badly impacted by the 2020 price fall, which coincided with the COVID-19 pandemic and global economic lockdowns.

However, higher oil prices this year, along with fiscal reforms, are likely to shrink state deficits and decrease debt growth over the next few years.

Oman aims to spend 12.1 billion rials ($31.43 billion) in total next year, according to the national news agency ONA.

The sultanate’s budget for next year is predicated on an oil price of $50 per barrel, according to ONA, quoting Finance Minister Sultan al-Habsi.

According to the organization, oil is predicted to account for 68 percent of overall state income next year.

Oman aimed to cut its budget deficit from an expected 11.5 percent of GDP this year to 8.8 percent of GDP next year in a medium-term fiscal plan released last year.

According to the state news agency, Oman anticipates public debt to reach 75% of GDP next year, which is lower than prior forecasts of an 86 percent debt-to-GDP ratio due to fiscal measures that included the implementation of a value-added tax.

The International Monetary Fund had stated that central government debt climbed to 81.2 percent of GDP last year, but that total debt would fall drastically to 47 percent of GDP by 2026.

Oman has said this year it is working with the IMF to develop a debt strategy.