‘Oman set to diversify economy, be less reliant on oil’

Oman oil anitastarzycka pixabayThe decline in Omani government spending may ripple the economy, according to experts. (Image source: anita_starzycka/Pixabay)Oman’s government has released a five-year plan to halve the economy’s dependence on the oil industry as low crude prices increases pressure government finances

The 2016-2020 plan, set out in a statement by Oman’s Supreme Council for Planning, said that over 500 programmes and policies would seek to diversify the Omani economy into sectors such as manufacturing, mining, transport and tourism.

The plan aims to cut the oil industry’s contribution to gross domestic product to 22 per cent from 44 per cent and the contribution of natural gas would drop to 2.4 per cent from the current 3.6 per cent.

“We should never forget the fact that the government is a major spender in any economy which produces a multiplier effect. Obviously, the decline in expenditure may mean reduction in investment expenditure which constituted roughly one third of the total budgeted public expenditure in 2015,” a financial expert told Times of Oman.

The plan revealed that average annual investments would total around 28 per cent of gross domestic product with cumulative investment over the five years expected to be US$106bn.

According to Reuters report, the new plan is to make heavy use of public-private partnerships, with 52 per cent of total investment to come from the private sector against 42 per cent in the last plan.

The plan also assumed an average oil price of US$45 a barrel for 2016, US$55 for 2017 and 2018, and US$60 for 2019 and 2020, while Oman’s average oil production is assumed to remain flat at 990,000 bpd.

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