Oman launches fiscal stability programme to boost economic growth

Three-year programme also aims to support development of country's financial sector

The Muscat skyline. Oman's economy has bounced back strongly from the pandemic-driven slowdown. Alamy

Oman has launched a three-year fiscal stability programme to add to the momentum of the sultanate’s economic recovery from the pandemic-driven slowdown and support the development of the country’s financial sector.

Launched by Oman's Sultan Haitham, the National Programme for Financial Sustainability and Development of the Financial Sector will begin from January 2023, according to a government statement carried by Oman News Agency.

The programme will “make the financial sector a major enabler for the growth of investments and the economy, in a manner that guarantees the continuity of all development programmes”, the state news agency said.

Sultan Haitham, who chaired a meeting of the Council of Ministers on Thursday, also reviewed the economic performance and progress made so far on projects under the country’s 10th five-year economic development plan.

He directed state officials to “double efforts towards the achievement of best results in economic diversification [of] sectors, with the aim of motivating the economy on a greater scale”, the news agency said.

Oman’s economic recovery is gaining traction, supported by a revival of the hydrocarbon sector and the relaxation of Covid-19 restrictions, the International Monetary Fund said last month.

The Gulf country’s fiscal reforms and higher oil prices are expected to further boost economic growth and generate a budget surplus in the medium term.

Oman’s economy is set to expand 4.3 per cent in 2022, supported by increased hydrocarbon production and continued recovery of non-hydrocarbon economic activity.

The sultanate’s economy rebounded 3 per cent last year after a 3.2 per cent contraction in 2020, helped by strong vaccination efforts and the relaxation of Covid-19 restrictions.

In October, Moody's Investors Service also changed Oman’s outlook to positive and affirmed its Ba3 rating on further improvements in the country’s economy.

The change in outlook reflects improvements in Oman's debt burden and affordability metrics during 2022 and the likelihood that the trend could be sustained in the medium term, Moody’s said at the time.

Oman, which recorded a budget surplus of more than 1.12 billion rials ($2.91 billion) in the first nine months of this year, is also trying to tackle rising inflation.

Sultan Haitham on Thursday directed the Council of Ministers to promote more than 2,000 government employees and fix petrol prices at October 2021 rates "as a maximum ceiling" until the end of next year, the state news agency said.

He also extended the “job security gratuity” for citizens, whose services were terminated until the end of June 2023.

Oman has also waived outstanding housing loans of employees and retirees of the armed forces and the Royal Guard of Oman “who get less than 450 rials per month".

The government also reduced and merged an additional set of government service fees to support various economic sectors, the report said.