A recovery in the Omani economy is well underway, said Dr Said bin Mohammed al Saqri (pictured), Minister of Economy, citing preliminary indicators of the country's economic performance that he noted are “very reassuring and constantly improving”
In a radio interview, he also pointed to clear evidence of growth in the labour market, with as many as 32,000 Omanis set to receive employment this year.
Based on initial performance indicators, there was a 10 per cent improvement in the country’s economic performance during the first half of 2021, compared with the corresponding period of last year when the economy underwent a contraction, Dr Al Saqri said.
Various international ratings agencies had also upgraded the country’s sovereign ratings, corroborating evidence of an improvement in Oman’s economic performance notwithstanding lingering pandemic-induced challenges.
“The 10th Five-Year Plan (2021-2025) will help restore the momentum of economic growth, accelerate economic activities and achieve balanced economic and social development through the implementation of many proposed programmes, initiatives and projects within a timeframe set by the Ministry of Economy and relevant government agencies,” said Dr Al Saqri.
He added in the interview that raising the efficiency of public financial management will help to bolster economic conditions weighed down by low oil prices and the pandemic.
The Ministry of Economy along with the Oman Vision 2040 Follow-Up and Implementation Unit, have been assigned roles to monitor important indicators related to increasing foreign investment, financial sustainability and rationalization of spending. In all, there are 430 programmes and initiatives set out in the 10th Five-Year Plan for implementation in this regard by various entities, he said.
At the same time, the Ministry of Transport, Communications and Information Technology is developing a dashboard that links all ministries, enabling the easy monitoring of how various government agencies perform in the implementation of their programmes outlined in the 10th Plan.
The 10th five-year plan, he said, seeks to achieve several overall objectives, including achieving a real average GDP growth rate of around 3.5 per cent and increasing the private sector's contribution to investment to about 60 per cent. At the same time, the real growth rate of non-oil activities is projected to rise to 2.3 per cent annually, and an increase in the investment rate to about 20 per cent of GDP.
Commenting on the results of the Medium Term Fiscal Balance Programme in improving the economic situation, Dr Al Saqri said the initiative seeks to tackle fiscal challenges stemming from low oil prices, the collapse of public revenues, the rise of the deficit, increased public debt, the decline in the credit rating of sovereign loans, the maintenance of macroeconomic performance, including economic growth, the performance of the economic sectors and the maintenance of the purchasing power of the Omani Riyal.
The programme seems to restore confidence in the performance of public finances, which is directly related to the private sector and improve financial performance, which leads to improved credit rating for sovereign loans and enable the government to borrow to implement investment and development projects. Maintaining financial balance is key to economic performance, he said.
Stimulus measures introduced by the government also have had a positive impact on the business environment, he said. An evaluation carried out by the Ministry of Economy showed that the measures helped alleviate negative impacts to the economy, while also helping many medium enterprises and strategic projects to continue to perform despite the challenges. A large number of jobs were also created as well, besides stimulating the country's economic performance.
In cooperation with the SME Authority, the Ministry has undertaken a number of programmes to stimulate economic activity, generate jobs, and support SME-led initiatives, such as the Winter Nights Festival programme.
This coordination has also led to the establishment of an incubator for the creative and transformation industries and a number of initiatives related to the establishment of enterprises in the agricultural field and an educational platform for entrepreneurship and legal consultancy.
Commenting on inflation trends, he said inflation in the country is within reasonable limits, reaching 1.9 per cent in the first half of 2021. According to macroeconomic performance indicators, inflation is expected to reach within 2.7 per cent going forward, which is reasonable as it will not lead to a significant increase in the cost of production.
However, if inflation rises sharply, direct intervention is needed to reduce its impact on the purchasing power of the Omani Riyal and the cost of production and income of individuals.
Asked about private sector receivables from the government, he said the issue was dealt with once and for all, with all outstandings settled, with the exception of those that are still the subject of clarifications.
A total of RO 800 million has been paid over the recent past, he said.
Turning to SMEs, he said the sector’s contribution to the GDP reached 17 per cent. “We seek by the end of the 10th five-year plan to lift this to 30 per cent, as the business environment in the Sultanate of Oman will stimulate the growth of the SME sector and drive growth.”
He added that the Ministry has carried out an integrated study to determine why SMEs do not benefit from a government directive mandating 10 per cent of government contracts to be allocated to SMEs. This is being resolved through discussions with commercial banks to encourage them provide funding support for these small operators.
In concluding, he said the Ministry will prepare a roadmap to enhance economic and bilateral cooperation between Sultanate of Oman and various countries of the world to encourage mutual protection of investments as well as benefit from memberships in international organizations.
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