Sultanate’s economy to grow by 3 per cent

WASHINGTON: The World Bank forecasts a gradual economic growth of the Sultanate to about 3 per cent by 2019 as the gradual recovery of oil prices will improve confidence and encourage private sector to invest in Oman.
The World Bank Middle East and North Africa Region (MENA) Economic Monitor Report, which was published on the World Bank’s website hailed the Sultanate’s revision of its economic policies, which relies on diversification and controlling public finance.
As per the report, the pro-business reforms, such as Foreign Ownership Law and the Foreign Direct Investment Law are expected to increase trade and investment opportunities in the country.
The report pointed out that in January 2017 electricity subsidies were removed for industrial, commercial and government users, who collectively consume over 30 per cent of the total energy supply.
Moreover, the adoption of a 5-per cent value added tax (VAT) expected in 2018, higher corporate income tax and increase in excise duties and fee for government services are expected to narrow the fiscal deficit to 7.4 per cent in 2019.
The bank added that current account deficit is projected to improve to 14.4 per cent in 2017 and continue to narrow as oil prices rise, non-oil exports grow. The report also noted that inflation is expected to ease to 1.1 per cent by 2019 despite the introduction of VAT due to stagnation in food prices and dissipation of cost-push pressures from subsidy reform.
The report stressed the fact that the successful recovery of economic growth, necessary for securing employment opportunities, hinges on timely implementation of diversification programmes.
The massive infrastructure spending programme under the 9th Five-Year Development Plan is likely to encounter delays as the government continues to be fiscally constrained.
“The industrialisation plan is set to boost demand for power which would require prioritisation of natural gas projects. The government will look towards increasing public-private partnerships,” the report added.
“While oil and gas revenues fell by 29 per cent in 2016, non-hydrocarbon revenues are estimated to increase by 20 per cent due to higher customs and investment income,” the report added. — ONA

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