Also read: Private sector workers worry for their benefits in Oman
Muscat: Thousands of expat and Omani employees working at state-owned institutions, run with 50 per cent government funding or more, are to have a number of benefits slashed, according to a decision from the Ministry of Finance.
The circular (5/2016) signed by Darwish bin Ismail bin Ali Al Balushi, Minister Responsible for Financial Affairs, stated that the decision has been made to cushion the economy which is struggling due to the oil price crunch.
Read also: Oil prices will stay low for longer than expected, says IMF chief
Speaking to Times of Oman, Anwar Al Abri, public relations officer of the ministry confirmed the decision, saying it was taken on Sunday.
According to the decision, privileges such as health insurance for employees and family, life insurance allowance, car insurance allowance for staff and family members, loans, bonuses, incentives during Ramadan or Eid and increments not related to employee’s Key Performance Indicators (KPI) will be stopped.
Additionally, allowances for school fees, mobile phones and bills, annual medical check-up for employee and family, provision of private car to senior managers, annual leave tickets, housemaid allowances, house rents, furniture allowances, credit cards for CEOs, hospitalisation fee and other allowances will also be stopped temporarily.
The decision reads that it was issued according to the Royal Decree 47/98 Article 6 which regulates the government investment, keeps a tab on government expenditure and regulates the public expenditure.
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A Majlis Al Shura member, who is also part of the finance committee, said that it was not part of the decision which comes under the responsibility of the Ministry of Finance.
However, he added that this is a step from the government side to control its expenses under the current financial situation.
“There is a huge financial support provided by the government to such companies and it’s the time to rethink about it,” the member added.
“The Finance Committee at the Shura has formed a team to study the semi-government companies with regards to their income and support allocated by the government. Such companies need to be monitored by the government. The team is studying their status and the progress they make with government grants,” said the member.
He added that the team would come out with results to explain if the government support is contributing to state finances or costing the public purse.
A finance advisor in a semi-government institution said that they are aware of the decision, however, but have not yet got the copy from the ministry through the official channel.
“We will be approaching the ministry tomorrow, to check about it,” the finance advisor said.
Another official in a semi-government institution also confirmed that discussions were going on in their office about the decision.
Meanwhile, an economist in Muscat said the circular is intended to rationalise the salary payment and the number of items/classifications and to restrain out of turn payments.
“I don’t think the ministry aims to do away with the basic privileges like house rent, medical facilities given to employees,” the economist added.
Official statistics show that Oman has lost $14 billion worth of revenues in 2015 compared to a year earlier due to low oil prices.
Oman had a fiscal deficit of 15 per cent last year and in 2016 the deficit is expected to be 17 per cent as the low oil price eats into export earnings and blows a hole in the country’s budget.
With breaking-even crude oil prices of $75 per barrel for the 2016 budget, Oman will need to dig deep into the reserves to come up with financial discrepancy to wipe out the OMR 3.5b deficit.
The decision mainly aims to halt privileges, which do not come within basic rights associated with the job, which are usually out of framework of normal expenditure, like allowances for entertainment and others which hit the budgets of the institutions.
Recently, the International Monetary Fund (IMF) has already cautioned Oman to make urgent steps to secure the future of its fiscal budget.
It had urged the government to embark on the long-term economic sustainability plans. The IMF had also urged Oman to cut its wages bills on the public sector.
This year, Oman has already shown its commitment to cut costs by reforming the subsidies with hikes in taxation and fuel prices.