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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Foundation laid for positive Omani economic growth

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MUSCAT, DEC 29 - Judging by most indicators, the prognosis is good for an upturn in Oman’s economic outlook, going into the New Year. This optimistic picture is fuelled by, among other developments, expectations of an ambitious privatisation programme going full steam ahead in the coming year, a rapidly improving investment and investment environment, and multibillion dollar investments in hydrocarbon, petrochemicals and renewable energy projects.


Already, the International Monetary Fund (IMF) and World Bank have forecast a heartening 3.3 per cent uptick in GDP growth in 2020, as Oman is poised to outperform many of its GCC peers in the coming year, according to Alkesh Joshi, Partner – EY Oman, a global leader in assurance, tax, transaction and advisory services.


“In my view, 2020 will be an extremely positive year for the Omani economy,” said Joshi, citing projections of a healthy recovery in the New Year. “I anticipate a State Budget based on a benchmark oil price of $60 per barrel, up from the $58 per barrel benchmark of the 2019 Budget.


This will result in a deficit estimated at between RO 1.8 to RO 2 billion for 2020, which will be well within manageable limits. The shortfall is expected to be funded partly through internal resources, generated perhaps through the part privatisation of state assets, and partly through borrowings from external sources.”


Also boding well for a pickup in the economy are expectations of a further leap in Oman’s standings in the World Bank’s ‘Ease of Doing Business’ Index.


The Sultanate is currently ranked 68th globally, a significant improvement over last year’s 78th slot.


“This dramatic leap sends the right message to the international investor community, and comes in the wake of successful efforts to manage the country’s fiscal deficit, and the enactment of new laws to enhance the economic environment in the country. Going forward, we can anticipate improvements in FDI inflows into the country, especially as a series of new Royal Decrees promulgated during July this year, come into effect in 2020, heralding a further strengthening of the legislative framework surrounding foreign investments.”


Economic diversification notwithstanding, the hydrocarbon sector is expected to grow by leaps and bounds going into the new decade, according to the market expert. He referenced OQ’s (previously known as Oman Oil and Orpic Group) recent pledge to invest $28 billion in new petrochemical projects over the next decade. Part of this investment will come in the form of foreign capital from international investors, he said.


Also noteworthy is the multibillion dollar Integrated Gas Development, which is expected to make initial headway in 2020, said Joshi. Centring on the prolific gas resources of the Greater Barik area in central Oman, the project brings together oil and gas majors, including Shell and Total, together with OQ Company and Petroleum Development Oman (PDO) in a game changing effort to monetize Greater Barik’s gas resources. Envisaged at the downstream end are a first-ever Gas to Liquids (GTL) plant proposed by Shell at Duqm, and an LNG bunkering hub by Total at Sohar Port.


Beyond the Oil & Gas sector, major projects planned in various Omani ports and free zones across the Sultanate are set to make further headway in 2020 with beneficial knock on effects for the wider economy. The $6 billion Liwa Plastics mega project in Sohar Port will be fully operational in 2020, igniting the growth of new value chains, while the port itself is undergoing a sizable expansion to accommodate new large-scale investments, said Joshi.


In Duqm Special Economic Zone, construction work on the $7 billion Duqm Refinery project continues to make rapid progress, while engineering work has commenced on an equally ambitious downstream petrochemicals complex. Salalah Free Zone, having pulled in a large portfolio of industrial investments during the year, will see some of them materialise during the course of 2020. Notable is the $120 million fertilizer project of Deepak Nitrite that will make further headway in its construction.


Human capital development is projected to pick up pace in 2020. “We will witness appropriate allocations being made in the fiscal budget for development of human resources. The National Training Fund has already signed up a number of agreements with prominent businesses to develop the workforce. In 2020 we could witness more impetus being given to this aspect of the economy,” Joshi added.


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