DUBAI: Oman’s sultan has approved a medium-term fiscal plan to make government finances sustainable, state media said on Thursday, as the coronavirus crisis and low oil prices batter state coffers.
The country has long had plans to reform its economy, diversify revenues and introduce sensitive tax and subsidies reform, but they dragged under the late Sultan Qaboos, who died in January after half a century in power.
His successor, Sultan Haitham, approved a 2020-2024 fiscal plan that included increasing government income from non-oil sectors, state media reported, citing orders from the Sultan.
Oman will also accelerate the establishment of a social security system for low-income citizens who may be affected by the government’s drive to bring down the country’s debt and cut state spending, one of the orders said.
Haitham also ordered 371 million Omani rials ($964 million) of unspecified development projects to be carried out across the country.
Rated non-investment grade by all major credit agencies, Oman’s debt climbed to around 60 percent of gross domestic product at the end of 2019 from less than 5 percent five years earlier.
On Wednesday it raised $2 billion in its first international bond sale since July 2019. People familiar with the plans had previously said Oman sought to raise between $3 billion and $4 billion in a three-part deal.
However, Oman scrapped a three-year tranche as it faces an aggressive debt repayment schedule between 2021 and 2023 and limited investor appetite for the offer, several bankers and fund managers said.
“Our estimate was that they wanted to do $3 billion. So I think the size might be a bit disappointing for them but I think they should be happier with the price,” Abdul Kadir Hussain, head of fixed income asset management at Arqaam Capital.
The country has begun preliminary discussions with some Gulf countries about financial support, according to a bond prospectus seen by Reuters. Bahrain, the only other “junk” rated Gulf country, averted a credit crunch in 2018 when it was bailed out with a $10 billion aid package from its wealthy neighbors.