Tough on spending, social welfare gets special focus

By Vinod Nair — MUSCAT: Jan 2: The Oman Budget 2017 presented on Sunday calls for the austerity measures to continue as it has been in the previous two years. Among the key highlights, the focus is social welfare and the uncompromising approach towards maintaining stability in the living standards of citizens stands out.
Key to this approach is the decision to rule out any changes in the annual increment of government employees. The budget says as the country has made remarkable achievements in areas such as health, education, basic services and infrastructure to maintain these achievements.
The allocations approved for these sectors amount to about RO2,686 million, 23 per cent of overall spending, of which RO1,586 million is for the education sector, RO613 million for the health sector and RO487 million for social welfare.
The budget adds that recruitment in public sector during 2017 will be limited due to the challenges from the sharp fall of oil prices, and higher spending on salaries and wages.
“The government decision to maintain status on salaries and increment is a matter of great relief,” said Mohammed al Bulushi, a government employee from the education sector.
“There should be more emphasis on competency and efficiency of the employees across the sector. This will naturally help in increasing the output and cut expenditure,” chief executive of a government enterprise said.
But the return of oil prices to acceptable levels is the key to the consumer confidence in Oman. “If there is no money there is little can one do. The government can pass structural reforms but those take time to display their effects,” said a senior economist based in Oman.
“This budget indicates that there is no need to panic for now, but business confidence may be still slow for some time as much will depend on the oil and gas and construction returning to normalcy,” said Joy Thomas, who runs an import business.  A lot will depend on the global economy and investors from outside coming to the Sultanate.
Private sector is expected to create job opportunities for Omani youths, through the establishment of investment projects that have economic returns. Based on the statistics issued by National Centre of Statistics and Information (NCSI), private sector will be able to create more 12,000 – 13,000 jobs in 2017.
Fiscal consolidation measures, undertaken by the Government since 2015, were gradual so as to minimise its implications on economic growth and employment. Spending cuts, reflected improvement in efficiency, have been confined to areas which do not affect salaries and allowances of government employees.
The government’s priority will be on the implementation of necessary projects that serve economic and social objectives, postpone the implementation of unnecessary projects and postpone purchasing and replacing government vehicles and equipment, as well as control capital expenditures.
The government will also limit the expansion of organisational structures of the ministries (such as creating departments and directorates).
Such standard governs the preparation of annual budgets by ministries and government units.
There will be a review of the government subsidy and the focus will be to direct such subsidy to needy citizens. However, the subsidy will be cut gradually.
For the nearly 40 per cent of the expatriate population in the country, the keys to note from the budget is the possibility of some fees of civil services offered by Royal Oman Police (ROP), rules pertaining to exemptions of customs duties, possibility of revised tariff of large customers of electricity
for commercial and industrial use and the standardised fees of municipal services.

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