11 January 2017

Oman is negotiating with wealthy Gulf Arab states to secure a multi-billion dollar deposit in its central bank that would boost its foreign exchange reserves and head off any pressure on the rial, two sources told Reuters on Tuesday.

Omani officials met in recent weeks with officials of the finance ministries of Kuwait, Qatar and Saudi Arabia to discuss the proposed deposit, the sources said, declining to be named because the matter is not public. Read more here.

The move is one of several measures revealed by the Omani government to combat the impact of the fall in oil prices over the last two years. The sultanate is expected to trim government spending on health, education, defence, as well as on its ministries and government units in 2017, while spending on the oil and gas sector will rise slightly, according to a report by the Times of Oman earlier this month, citing a detailed report by Ernst and Young. Read more here.

The newspaper also reported that the Muscat government plans to introduce a series of measures for effective fiscal discipline, which include formation of a special cell within the finance ministry for building a ‘fiscal model’ for public finance, a separate unit for public debt management and efforts to improve credit rating. Read more here.

In the first seven months of 2016 Oman’s budget deficit almost doubled to 4.02 billion rials ($10.5 billion) and the government has looked to expats to generate new sources of revenue.

In November it announced it is considering raising the fees of expatriate employment permits in the private sector, Gulf News reported, part of a bid to provide Omani nationals with more job opportunities. Read more here.

With salaries decreasing and fees increasing, it is no wonder Omani trade union officials and experts predict that the ‘expat exodus’ that began in 2016 will continue into 2017. Read more here.

The news that Oman is to look to its Gulf neighbours for help comes nearly a year after it announced plans to borrow between $5 billion to $10 billion to help finance its 2016 budget deficit. Read more here.

© Express 2017