Sultanate of Oman: Subsidy reform to start in January

The Omani government announced today, Sunday, that the Sultanate will begin reforming the costly subsidy system in January, bringing the focus to water and electricity subsidies for the poorest groups.

The plan, along with new labor laws, privatization and taxes, aims to reduce the growing fiscal deficit, which the International Monetary Fund expects to reach 10% of economic output this year.

The government media office said the new subsidy system for electricity and water would exclude families whose income exceeds 1,250 riyals ($ 3,260) a month. The office indicated that families with incomes less than 500 riyals will continue to receive government support in utility bills. For other groups, support will depend on the number of family members.

The new plan will begin in January, and eligible Omanis must begin submitting applications from Sunday. It was not clear whether foreign residents would benefit from the new system.

The Sultanate has accumulated debt in the past few years and has a high risk rating from all major credit rating agencies.

Low oil prices and an economic slowdown as a result of the coronavirus outbreak have put pressure on the finances of Oman, a relatively small energy producer.

The country’s new ruler, Sultan Haitham bin Tariq Al Said, made changes in the government and state entities, and last October approved the application of value-added tax from next April to support public revenues.

Oman has also started preliminary talks with some Gulf states to obtain financial support.

Source: Reuters

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