DUBAI - Oman repaid 1.1 billion rials ($2.86 billion) in loans in the first quarter, finance ministry figures show, bringing total public debt at the end of March to 16.6 billion rials.

Total debt was 17.7 billion rials at the end of 2022.

Oman repaid the debt through increased government revenue on the back of higher oil prices, the fiscal performance bulletin said.

A steep decline in Oman's debt to GDP ratio, with gross debt falling to about 40% of GDP in 2022 from around 60% the previous year, plus higher oil prices and more disciplined public spending has prompted ratings agencies to upgrade the Gulf state's credit rating outlook.

On Tuesday, Fitch revised Oman's outlook to positive from stable and reaffirmed its rating at BB, following a similar action from S&P earlier this month.

Net oil revenue reached 1.15 billion rials at the end of February, up from 1.09 billion rials in the same period a year ago, as oil prices averaged $86 per barrel in the period over $81 per barrel at the end of February 2022.

Oman's economy remains primarily reliant on hydrocarbons revenue despite plans to diversify into sectors such as tourism and logistics.

Increased production combined with higher oil prices led to a budget surplus of 372 million rials at the end of February, up from 210 million rials in the prior year period, while total revenue jumped 12% and spending was 4% higher.

Oil and gas revenue represented almost 80% of total public revenue, the finance ministry said, making Oman more vulnerable to global swings in oil prices.

Earlier this month, Oman agreed to a voluntary oil output cut of 40,000 barrels per day starting from May until the end of 2023, along with other OPEC+ member states, pushing oil prices higher.

Oman launched a medium term fiscal plan in 2020 to reduce public debt, diversify sources of revenue, and spur economic growth.

It recorded a fiscal surplus in 2022 of 1.146 billion rials as higher oil prices boosted revenue.

($1 = 0.3850 Omani rials)

(Reporting by Rachna Uppal; Editing by Angus MacSwan, Kirsten Donovan)