The economic downturn following the drop in oil prices from 2014 and the Covid-19 pandemic led the government of Oman to introduce a Medium-Term Fiscal Balance Plan (MTFB) in 2020. Approved by His Majesty Sultan Haitham bin Tarik, the plan aimed to streamline financial resources based on national priorities.
The MTFB focused on establishing financial sustainability in the Sultanate of Oman, reducing national debt, enhancing government spending efficiency and increasing revenues from non-oil sectors. It emphasised strengthening the country’s financial reserves, improving government asset revenues and improving fiscal discipline.
A key initiative within the plan was the establishment of a social assurance system aimed at safeguarding low-income segments and families under the Social Security Scheme. This ensured social support during times of economic strain.
The plan also sought to invigorate the private sector, fostering economic growth and creating job opportunities. Measures included streamlining the process for obtaining labour permits, consolidating municipal services and permitting non-Omanis to own residential properties in specific areas outside the Integrated Tourism Complexes (ITCs).
In line with fiscal reforms, Oman introduced the Value Added Tax (VAT) in 2020, exempting essential goods such as food, medicines and household items from the tax. This helped maintain the lowest inflation rates in the GCC.
Additionally, the MTFB highlighted the need for a personal income tax, which, once introduced, was designed to have a minimal impact on the economy, especially for individuals earning less than RO 2,500 per month.
A vital part of the reform process was the implementation of the Social Protection Law, ensuring monthly assistance to all societal segments, from children to the elderly, creating a comprehensive social safety net.
To boost tourism, the government made travellers from over 100 countries eligible for visa exemptions for stays of up to 14 days, which played a crucial role in Oman’s swift recovery from the pandemic. This reform has notably contributed to an uptick in foreign tourist arrivals, helping Oman become one of the few countries to recover quickly from the challenges posed by the 2020-2022 crisis.
Apart from the MTFB, Oman also introduced significant reforms, such as new laws regulating marriages between Omanis and foreigners, updates to the School Education Law, and the creation of a National Fund for Emergency Cases to address disasters like floods, earthquakes, and other emergencies that threaten public infrastructure and facilities.
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