MUSCAT: Oman’s Sultan Haitham Bin Tarik issued a royal decree on Friday, approving the state’s general budget for the financial year 2021.
The Arabian Gulf state is projecting a 2.24 billion Omani rials ($5.7 billion) deficit in the fiscal year that is equivalent to 8 per cent of its gross domestic product, the state’s Oman News Agency tweeted, report agencies.Almost 73 per cent (1.6bn rials) of the deficit will be covered through external as well as domestic borrowing. While the remaining shortfall, estimated at 600 million rials, will be financed through withdrawal from the state’s own reserves.
Government revenue for the year 2021 is projected to decrease by 19 per cent year-on-year to 8.64bn rials. The total spending is estimated to decrease to 10.88bn rials, an annual drop of 14 per cent. This is based on an oil price projection of $45 a barrel this year.
Oman also approved the tenth five-year development plan 2021-2025 on Friday.
The plan seeks to stimulate the economic activity, develop the macroeconomic environment and raise the efficiency of public financial management, ONA tweeted.
It aims to achieve a balance between measures to control and rationalise public spending and adopt disciplined financial policies to achieve sustainable growth rates in the future, it added.
Oman’s economy is projected to shrink 0.5 per cent in 2021, according to the International Monetary Fund’s latest forecasts.To reduce its reliance on hydrocarbons and attract more foreign investment, Oman has taken a slew of measures in the past.
In November, it opened up its real estate market to foreign investors further by allowing them access to a wider selection of residential properties as part of reform measures aimed at improving the country’s fiscal position.
Oman is also proposing reforms to the labour market to make it more flexible and the Sultanate is planning to allow visa-free entry to more than 100 nationalities to boost its tourism industry.
Earlier in March, it also approved a raft of measures including budget cuts of 5 per cent in different ministries and units in response to the coronavirus pandemic and drop in oil prices.
The new five-year plan looks forward to stimulate private sector investment and focuses on increasing the contribution of non-oil sectors to the economy. It sets a target for an average annual growth of around 3.2 per cent in the GDP of non-oil activities by focusing on promising economic sectors, according to ONA.
Some of these sectors include manufacturing, agriculture, fish farming, food processing, transportation, storage and logistics.