Saturday 20 / April / 2024
Muscat: Oman’s deficit has decreased by a billion rials over the past year, according to the final state accounts released by the Ministry of Finance.
Ministerial Decision number 171/2019, signed by HE Darwish Al Balushi, Oman’s Minister of Finance, showed that Oman’s deficit stood at OMR2.649 billion in 2018, a billion rials less than the OMR3.759 billion that was posted in 2017.
Oman’s total revenue in 2018 totalled OMR10.949 billion, up from OMR8.51 billion in 2017. During the same period (2018), expenditure stood at OMR13.59 billion, or a deficit of OMR2.649 billion, compared to an expenditure of OMR12.27 billion in 2017 and a deficit of OMR 3.759 billion.
Although Oman’s budget had aimed for a lowering of the deficit, an improved financial performance led to a greater decrease than had been previously expected. The expected budget deficit of OMR3 billion was OMR400 million higher than the final
posted total.
The education sector in Oman cost OMR1.58 billion in 2018, while the health sector spent OMR660.8 million and the social insurance and social care sector outlay was OMR471.6 million. The housing sector cost OMR494.9 million, the agriculture and fisheries sector had an outlay of OMR56.1 million and the transport and communications sector spent OMR59.0 million. In addition, the culture and religious affairs sector spent OMR218.7 million, and the energy and fuel sector’s total outlay was OMR4.5 million.
Ahmed Al Hooti, the head of economic research at the Oman Chamber of Commerce and Industry (OCCI), said that Oman had taken positive steps towards reducing the deficit, which could benefit businesses in the country in future. Al Hooti said: “The recent steps related to financial recovery are very good and could be improved further. The goal is to cut unnecessary spending and turn that into spending that can incentivise Oman’s economy. The economy cannot be active without precise and studied spending by the government which is expected to push forward Oman’s economy.”
He added that Oman aimed to provide further momentum to its economy with its latest economic decrees, which aimed at establishing partnerships between the private and public sector, the privatisation law, and the new foreign investment law among others.
“I think the latest Royal Decrees including the public-private partnership law will allow the private sector to play a bigger role in growth in the coming period, and it will also lower government expenditure in project spending and management,” he explained.
“The privatisation law also allows the government to focus on other things while handing some jobs over to the private sector.”
Al Hooti added, “Companies in Oman want the government to spend on some projects because they will be able to benefit from these contracts.
“This means higher economic activity and also more hiring in the private sector, which benefits Omani and expat workers.”
In addition, Dr CK Anchan, an international trade advisor in the country, said that Oman’s plans to expand its economy under the Tanfeedh initiative and speed up the time taken to establish new business would help further push down its deficit and boost its budget in the years to come.
He said, “Steps towards economic diversification have continued with a renewed focus and are being rolled out at pace. In late 2016 the government launched Tanfeedh, the National Programme for Enhancing Economic Diversification, as a core tenet of the country’s ninth-five-year plan. The programme aims to leverage Oman’s strategic location outside the Gulf to spur growth across five key sectors: manufacturing, logistics, tourism, fisheries and mining.
“These efforts are complemented by the favourable terms of business available in the Sultanate’s numerous special economic zones for those wishing to set up in the country,” added Anchan. “The acceleration in growth comes amid efforts to broaden the manufacturing base and increase its contribution to GDP to 15 per cent by the end of the decade. A series of new investments look set to boost manufacturing output in the coming years.”
He went on to say, “The utilities industry in Oman is going through a transitional period in anticipation of major restructuring and renewal in the water and electricity segments. Changes in technology, such as the introduction of cost-reflective tariffs (CRT), are making distributed provision more cost-effective.
“Meanwhile, in terms of water provision, the Sultanate’s procurement agency has worked hard to bring considerable new capacity on-line across Oman’s five water zones,” said Anchan. “Over the longer term, pro-business reforms such as foreign ownership, foreign direct investment, SME support and public-private partnership laws are expected to increase trade and investment.”
