Details of the 2011 budget were released on January 1st with total public revenue estimated at OR7.3bn or 14% higher than the 2010 budget. The budget also assumes an increase of 13% in expenditure to OR8.1bn, thereby implying a budget deficit of OR850m. However, high oil prices and conservative oil price estimates for the preparation of budgets in the past have enabled the sultanate to turn in a series of budget surpluses. The national economy minister, Ahmed bin Abdulnabi Macki, also said he expected most of the OR800m budgeted deficit for 2010 to be covered. We estimate that government revenue increased by 14% year on year, to OR7.7bn, in 2010 as a result of increases in oil production and oil prices. We forecast that revenue will increase by 3.1% in 2011 to OR7.9bn. This is higher than the budgeted revenue for 2011, owing to robust growth in non-oil exports as well as an increase in oil prices in 2011. We estimate that government spending in 2010 reached OR7.4bn, which is slightly above budget (as the government continued with its economic diversification projects), but the overspend is smaller than in 2009. We forecast that spending will increase by 6.5% in 2011. We expect the budget surplus to narrow to 0.4% of GDP in 2011 owing to an expansionary fiscal policy and modest growth in crude production. Increased revenue from non-oil exports will boost government income in 2012, leading to a widening of the surplus to 0.9% of GDP.