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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Oman 2018 budget to spur growth and development

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SALEH AL SHAIBANY - saleh_shaibani@yahoo.com - The 2018 fiscal budget has all the ingredients to spur growth and kick-start the development needed this year to push the economy in the right direction. The budget sees an expenditure growth of RO12.5 billion this year, rising from RO11.7 billion to the budget planned in 2017 budget.


The government income is set to reach RO9.5 billion, increasing from 8.7 billion in the last year’s budget. The deficit of RO3 billion `this year is unchanged compared to the year before.


Oman is banking on oil prices to stay stable this year to fund heavy spending on job creation and social welfare.


This year’s budget is based on an average oil price of $50 per barrel, $5 more than it was forecast for 2017. Currently, the international oil price is trading at around $65, that means Oman would have a cushion of $15 per barrel.


If this assumption stays on target, then the revenue would be significantly higher than predicted in the 2018 budget. It would also mean Oman may not have to dig deep into its reserves or borrow from international banks to wipe the fiscal deficit.


With oil producers already pledging to cut down oil production this year further to boost prices, the government can achieve most of its economic goals in 2018. The other good news is that the budget projects a deficit of only 10 per cent of gross domestic product (GDP) in 2018, two per cent less than in 2017, which most economists consider as sustainable.


The 2018 is looking to reduce dependence on oil income by diversifying to other areas that would yield higher revenues and the country is banking on foreign investments to expand its economy. In the last year’s budget, Oman’s revenues made up 83 per cent of its total income. This year, oil revenues will make up just 66.5 per cent of total income.


The prudent budget released by the finance ministry will continue to raise spending to boost economic growth planned this year.


Emphasis is also on boosting living standards, to build social housing and give assistance to lower-income Omanis. Last week, Oman has already announced the RO 100 million subsidy package, including the fuel welfare.


Moreover, this year’s budget will concentrate spending on industrial and infrastructure projects to diversify the country’s economy beyond oil productions. In key sectors such as education and health, Oman has cut no corners to push ahead with its commitment. The budget would also push forward Oman’s most ambitious projects like the railway.


The implementation of the railway project in the Sultanate is one of the strategic projects that will contribute to the requirements to sustainable development in all economic and social levels, by linking the central areas of development in the country. The railway project is also integrated with the system linking the Sultanate’s ports with railways of the Gulf Cooperation Council countries.


The higher government expenditure this year is aiming at increasing investor confidence with the main objectives of sending out a clear signal to international partners that Oman will honour its project commitments.


The budget has taken into consideration that the country is a young nation and education cannot be compromised. In the employment front, the budget has given the priority towards job creation in cooperation with the private sector.


The private sector also received a boost with the delay of the introduction of a 5 per cent value-added tax until January 2019 to give companies more time to make adjustments to their businesses.


In 2018, the finance ministry said that it would push forward with the privatisation programme to sell off some of the government’s organisations.


There are over 40 public organisations and agencies that are duplicating services employing more than 20,000 people. Selling off these agencies to the private sector will not only streamline the government but create thousands of jobs.


In conclusion, many Omanis should look forward for the 2018 as the Ministry of Finance has already put up the right framework for the economic push.


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