Oman’s Sultan Haitham Bin Tarik has approved the country's fiscal plans for the next four years that will see it cut back on government spending and reduce national debt, the Oman News Agency (ONA) reported on Thursday.
The royal decree set rules for the financial sustainability of the Sultanate and will also focus on diversifying the economy to reduce its reliance on hydrocarbons as part of its efforts to boost the state’s financial reserves.
The decree is aims to improve investment returns from government assets to offset low oil prices and their impact on economic growth, ONA reported.
The Sultan's order also included 371 million rials ($964.8 million) for the development of regional towns.
Since succeeding the late Sultan Qaboos bin Said on January 11, Sultan Haitham has rolled out various measures to cope with the economic fallout from the coronavirus pandemic and low oil prices to stimulate the economy, including introducing a five per cent value-added tax (VAT), which will begin in the second quarter of 2021.
In August, the Sultan ordered all civil servants who had completed 30 years of service to be retired as part of the government's cost-saving measures.
He also reshuffled the cabinet last month and streamlined civil ministries from 26 to just 19 for a leaner and more efficient government.
On Wednesday, it raised $2 billion in its first international bond sale since July 2019.
However, economists say the government needs to wean itself off oil income to offset the fiscal deficit.
“Oman has been talking about a diversification programme for many years but little has been done about it. It simply cannot depend on oil income alone. Privatisation is the way forward here,” economist Khalid Al Sabahi said.
The Sultanate based its 2020 fiscal budget on oil trading at $58 per barrel. However, with crude currently trading at about $42 per barrel, the government is preparing for a deficit of 2.5 billion rials in 2020, slightly lower than the 2.8 billion rials projected in the 2019 budget.
Coronavirus has also hit the country’s tourism industry hard. In 2019, Oman received more than three million tourists compared with fewer than 200,000 this year. It also cancelled the Khareef festival in the southern city of Salalah, one of the major tourist attractions in the country.