The government of the Sultanate of Oman announced the approval of a plan to reform the costly subsidy system, according to which work will be carried out starting next January, so that the focus will be on 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 percent of economic output this year. The Sultanate of Oman has accumulated debt in the past few years and holds a high risk rating by all major credit rating agencies.
According to the government, the new subsidy system for electricity and water will exclude families whose income exceeds 1,250 riyals ($ 3,260) per month. Revealing that families whose income is 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 Sultanate of Oman had started preliminary talks with some Gulf countries to obtain financial support. Low oil prices and an economic slowdown due to the outbreak of the Coronavirus have weighed on the sultanate's finances. Sultan Haitham bin Tariq Al Said also made changes in the government and state entities, and approved in October the application of value-added tax, starting next April, in order to support public revenues.
Source (Al-Sharq Al-Awsat newspaper, Edited)
