Oman Budget 2013

It is sometimes difficult to appreciate that running the finances of a country is based on the same fundamental principles as one’s own household budget. What you earn needs to be more than what you spend; otherwise you are left with the hope that your bank manager is one of the friendly ones who will bail you out with a loan.

The headlines of the Oman budget are easy to understand. In 2013 it is planned that the revenue for the country will be RO11.2bn. Eighty four per cent of this comes from oil and gas, and the figures assume an average price of US$85 per barrel of oil.

Spending is planned to be RO12.9bn, more than the revenue. The price of oil today is actually US$108, so it seems unlikely that the government here will need to borrow to make ends meet, with the higher oil price making up more than the difference.

This planned spending figure is most interesting. It is 29 per cent higher than 2012, and will allow the country to commit more money to many different things. When we read about the austerity measures being imposed on some European countries to save money, or see other nations needing to borrow huge sums to keep themselves going, it shows how healthy the sultanate is in financial terms.

The idea is that Oman can stimulate economic growth through continuous spending. Expenditure will be raised on housing, roads, airports and ports. Defence and security will also see increases. And the social sectors will also benefit from major initiatives, with healthcare and education being targeted for significant injections of cash to bring about improvements.

 

I have some concerns however with some of the headlines. Diversification of the economy of Oman away from oil and gas, which has been an objective for many years, is simply not happening in reality. If anything, the sultanate is more dependent on oil revenues than ever before. This in the long term needs to be resolved. The growth of other sectors brings with it better services, and wider employment opportunities.

 

I am also concerned with the number of government jobs being created. Another 36,000 have just been announced, 20,000 of which will be in the military. The government wants the private sector to create 20,000 jobs too, but many Omanis, when hearing about new government jobs, leave the private sector to take up these posts. This is because the work is seen to be more secure, with shorter hours, better benefits, and an easier life. This makes the task of the private sector, to provide more jobs, extremely challenging.

It is right and proper for jobs to be created, but the solution is for government to facilitate growth of the private sector by removing the rules and regulations that seem to strangle new ideas or initiatives. With so much money around in the system, I am simply amazed to see so little to buy in our shops, and so many vacant units in our shopping malls. There are many more products available in neighbouring countries at much more competitive prices. How many times do you hear “you can’t get that here, go to Dubai.” Why is this?

It is time for our leaders in government create real incentives for businesses to expand, create jobs, and to allow them to help to improve the standards of living. I would like to see more emphasis on the carrot, and less on the stick.

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