Oman’s economy faces challenges after this turbulent year
The corona virus disease pandemic has toyed with Oman’s economy. The real gross domestic product (GDP) is in position to reduce in percentage according to the rating report of S&P Global.
The impact pandemic on the economy as the Sultanate opens the borders
The low crude oil revenue has left Oman’s finances in a precarious position with spending cuts and additional taxes that will help reduce the rising budget deficit. The sultanate might require support from its Gulf neighbors unless oil prices rebound. The coronavirus diseases have roiled Oman’s economy with the real gross product (GDP). The GDP was expected to reduce to 5% this year based on the ratings made by S&P Global.
Furthermore, the country’s gross debt soared to 84 percent of GDP in 2020 from 2019’s 60 percent. By S&P estimates, a predicted average of $50 for oil prices is to be expected in 2021 with a potential increase possibility of $55 in 2023. Fabio Scacciavillani, a partner at Dubai investment bank Emintad and the former chief strategy officer at Oman Investment Fund has stated that Oman needs the Brent Price to rebound to above $60per barrel to reach a comfortable fiscal zone. According to Fabio, until the oil price surpasses $80, Oman might not be able to get out of the woods. This means that until when Oman’s oil prices attain the break-even fiscal level and avoid growing bigger.
The government has now downsized its processes reducing the number of days needed to open a business and obtain labor visas for foreign workers. The slashing also includes housing fees from 5 percent to 3 percent, with the laws allowing foreigners to own property being relaxed. The country now allows citizens from more than a hundred countries to enter the country visa free.
Oman’s future economic plans
The country plans to increase its revenue to 12.1 billion trials in 2024 from 8.6 billion trials this 2020. The government predicts that this will reduce the fiscal deficit to 1.7 percent of GDP in 2024. The fiscal plan will emphasize spending cuts that are expected to have a temporary socio-economic impact. Finally, these measures are predicted to bolster foreign and domestic investment in Oman, improve economic activities and create jobs.