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Reducing debt, rationalising expenditure priorities

The authorities concerned are taking several measures to conform to the items of general budget of the Sultanate for 2019 in light of the precautionary measures and controls taken by the Ministry of Finance (MoF). These measures are aimed at reducing public debt in the coming years. The Ministry of Finance has issued instructions to all the government entities — ministries, institutions and companies — to bear in mind the current changes in the Sultanate’s financial position when they make their project proposals for next year. They have been requested not to assume any expansion in its budget and ensure all measures to rationalise expenditure and reorganise priorities in line with the available financial resources.

The aim — as indicated in the ministry’s circular — is to adopt the main principles for preparation and success of draft budget for FY2019 without any obstacles by continuing to reduce budget deficit and containing it within safe limits, reducing high level of public debt, rationalising public expenditure and enhancing its efficiency and finalising transformation stages to implement programme and performance budget. The Ministry of Finance’s instructions are in line with a series of precautionary measures for the State Budget of 2019 to adapt without prejudice to basic government services of priority to citizens and in line with the global and local conditions for the sustainability of public finances and stability of the country’s economic situation.

Meanwhile, the ministry is demanding that these guidelines be followed. It has also told the government institutions that basic government services such as health, education, electricity, water and social security should not be affected.

Many citizens rely on free government services, especially education, (elementary to college) as well as access to health/ medical services, energy and government assistance in the construction process.

The instructions warn that institutions should continue to diversify their sources of income and raise the contribution of non-oil revenues to total government revenues, which will gradually reduce dependence on oil and provide all means to improve the business environment to raise investment rates and create jobs for citizens.

In addition, efforts shall be exerted to achieve an economic growth of a minimum of 3 per cent at constant prices on average in the current Ninth Five-Year Plan, which ends in 2020, giving priority to the implementation of projects that serve the economic and social objectives, and postponement of non-urgent projects.

Many topics have been addressed in this regard such as improving the credit rating of the Sultanate, upgrading efficiency of the state-owned economic institutions, expanding participation of the private sector in the implementation of projects, improving the business environment, increasing investments, optimal utilisation of potentials, raising the efficiency of workers, linking wages to production, drawing estimates of the expenses of operating projects expected to be completed in 2019 and taking a decisive action to rationalise electricity and water in public institutions.

The ultimate goal is to raise the efficiency of state-owned economic institutions and enhance their performance in the national economy, expand the private sector’s role in the implementation and management of certain projects, facilities and businesses and improve the Sultanate’s credit rating.

Today, government entities have an obligation to obtain the approval of the Ministry of Finance in finalising any contracts with the private sector for new projects. This will ensure optimal use of potential physical and human resources to achieve the desired objectives with a high economic efficiency and improve performance rates and economic indicators in line with the amount of funds invested in those projects.

Haider Al Lawati

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