Muscat: An upswing in oil prices has helped Oman slash its deficits to a fraction of what they previously were, and the Sultanate is expanding its economy to ensure that it remains financially robust for the coming years.
According to Oman’s Government Communications Centre, Oman’s state budget deficit has decreased from OMR3.5 billion in the first half of 2016, to just OMR660 million during the first half of 2019.
In addition to this, the annual report from the Central Bank of Oman (CBO) has revealed that the country’s current account deficit plunged from OMR4.2 billion in 2017 to OMR1.7 billion in 2018.
A statement from the Government Communications Centre said: “The Sultanate’s financial performance has improved during the first half of the ongoing year in light of average oil prices stabilising and the continuation of the procedures undertaken by the government to ensure that the financial and economic situation is sustainable.”
Tahir Salim Al Amri, the executive president of the Central Bank of Oman (CBO), in the organisation’s annual report, said, “A large upsurge in hydrocarbon exports and non-oil exports, and moderation in imports led to an improvement in the external sector with the current account deficit declining to about OMR1.7 billion in 2018 from around OMR4.2 billion in the previous year. The CBO continued to pursue policies and implement measures that support growth in the economy.”
Tahir Salim Al Amri, the executive president of the Central Bank of Oman (CBO) said: “Adequate liquidity was ensured in the banking system so that credit availability remains supportive of productive activities. The CBO also relaxed some regulatory requirements to create additional space for credit with banks. The banking sector remained resilient and healthy with adequate capital, low delinquency rate, and sufficient liquid assets, supporting financial stability on a sustainable basis. It is acknowledged with great appreciation that the CBO received unstinted cooperation and support from the government, commercial banks, and other institutions in discharging various responsibilities efficiently.”
According to the CBO’s annual report, the price of Omani crude oil averaged at $69.7 (OMR 26.84) a barrel in 2018, compared to $51.3 (OMR19.75) in 2017, and as Oman’s deficits continue to decrease, consistent investment in the nation’s tourism sector has led to a surge in tourism, leading to a hike in income from tourism filling the country’s coffers. Money that can be used to not just balance out these deficits, but also be redirected into more economic and social investment for the country.
Tourism is one of five sectors that have been selected for economic development under the Tanfeedh programme. The other four are manufacturing, transport and logistics, agriculture and fisheries, and mining and energy.
Oman’s Ministry of Tourism’s promotional campaigns to make more tourists aware of what the country has to offer are providing results.
The Ministry of Tourism has established eight representative offices abroad in France, Dubai, Berlin, Britain, Netherlands, Italy and Russia, to attract more tourists from these countries.
There was, for example, a 162 per cent of increase in tourists from Russia in 2018, with nearly 10,000 tourists coming into Oman from Russia in the first five months of 2019. Commenting on this, Salim Al Maamari, the director general of promotion at the Ministry of Tourism said, “The Ministry of Tourism recently established an office in Russia, to take advantage of the Russian market that is one of the most promising tourism markets. We have a great interest in increasing arrivals from Russia.
He added: “Accordingly, we are keen to participate in tourism events and exhibitions held in Russia. According to data, there has been an increase of 162 per cent in tourists coming from Russia in 2018, or 10,877 people, compared to 4,156 in 2017. In the first five months in 2019, the Russian tourists who flocked to Muscat amounted to 9,651”.
Data from the National Centre for Statistics and Information (NCSI) showed that in 2018, there were a total of 3.56 million guests who checked in to hotels in Oman, up from 3.31 million the previous year. Of these, 1.36 million were Omani (up from 1.29 the previous year), 918,000 were European (up from 798,000) and Asian nationalities made up for another 608,000 (up from 580,000).
The NCSI said that as of June 2019, the number of guests in three to five-star hotels was 872,000, up from 722,000 the previous year. As of June 2019, revenues from these categories of hotels amounted to OMR116 million, up from OMR106 million during the same period last year.
A statement from the NCSI said, “10 per cent was the increase in total hotel revenues in 2019, compared to the previous year, reaching OMR260million. 38 per cent of the hotel guests in the Sultanate in 2018 were Omani, while Europeans formed about 26 per cent of the total hotel guests, and the total number of hotel guests in the Sultanate increased by 7.5 per cent during 2018 to reach 3.6 million, compared to 3.3 million during 2017.”
According to the Government Communications Centre, Oman spent OMR6.6 billion in the first half of 2016, compared to OMR3.1 billion in revenue, resulting in an OMR3.5 billion deficit. By June 2017, Oman had spent OMR6.4 billion and made OMR4 billion, resulting in an OMR2.4 billion deficit. In 2018, Oman had spent OMR6.3 billion and made OMR4.9 billion, resulting in an OMR1.4 billion deficit. So far, in 2019, Oman has spent OMR6.1 billion by June and made OMR5.5 billion in the same period, which shrank the deficit for the half-year period to 0.66billion.
In addition, data from the GC showed that Oman’s oil revenues had increased by five per cent, its revenue from gas has increased 9.3 per cent, Oman’s revenue from the income tax on companies has increased by 45.1 per cent, and its other forms of diversified revenues have increased by a further 42 per cent. During the same point, capital spending on civil ministries decreased by 73.3 per cent and its developmental spending for ministries has gone down by 15.1 per cent.
Furthermore, general contributions and subsidies have decreased by 18.1 per cent.