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Towards a sustainable future: Oman Since coming to power in January 2020, Sultan Haitham bin Tariq Al Said has made significant strides in implementing structural reforms to shore up the economy, drive diversification and spur long-term sustainable growth
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he World Bank in August said that the three GCC countries with the largest deficits in 2020, Oman included, are projected to remain in deficit throughout 2021-23, but at narrower ratios to real gross domestic product (GDP) in 2023 compared to the economic downturn in 2020. Since January 2020 when Sultan Haitham bin Tariq Al Said was sworn in as the new ruler of Oman following the death of his cousin Sultan Qaboos, the world had its eyes glued on the Sultanate to see how the Gulf state would navigate the double whammy of the COVID-19 pandemic and low oil prices. Oman has one of the weakest credit ratings in the Gulf region compared to its oil-rich neighbors and the country is more sensitive to volatility in oil prices, meaning it was significantly impacted by
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last year’s historic price crash and weak demand due to the pandemic. Like its GCC peers, Kuwait, Qatar and Saudi Arabia, Oman depends heavily on oil which accounts for 70% of the Sultanate’s exports and government revenues. However, unlike most of them, Oman has high debt, a smaller stock of sovereign wealth assets and relies on external financing that is expected to cost more to fund amid sluggish growth due to the pandemic. Despite a rebound in prices to more than $70 per barrel this year, the World Bank said that Oman needs to implement more reforms to achieve sustainable growth and economic diversification. Under Sultan Haitham bin Tariq’s Vision 2040, the Sultanate has made significant strides in implementing structural reforms to boost the non-oil
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economy, drive diversification and spur long-term sustainable growth. As part of the government’s broader strategy to shore up the economy, Sultan Haitham restructured government and state entities including the Gulf state’s wealth funds and introduced a 5% value-added tax (VAT) in April. The Sultanate also introduced several austerity measures last year which helped it maintain access to the international debt markets. The International Monetary Fund (IMF) expects Oman’s economy to rebound and expand by 2.5% in 2021 with around 3% average growth over the medium term, thanks to a projected increase in hydrocarbon production as well as the impact of the vaccine rollout, according to the fund’s July projection.
Fiscal woes Since taking power in 2020, Sultan
