The Sultanate of Oman has already decided to sell a 19% stake in Oman Telecommunications, the country’s largest phone operator, and now His Excellency Darwish Bin Ismail Al Balushi, the Minister for Financial Affairs, has announced that the government plans to privatise a number of state companies
Speaking on Tuesday at a function to launch the new credit card being released by Oman Air, in conjunction with the Bank Musca, Al Balushi said, “we are a few months away from the announcement of the new budget, which is currently under preparation and will be announced on Jan. 2. The 2014 budget will see the announcement of the companies that will be privatised.
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We have a privatisation strategy, which was approved by the government. That is a two-fold strategy, which opens the doors for the private sector to venture into new projects on the one hand and reduces the government stake in...companies that are wholly or partially owned by the government.”
Reuters reports that the government of Oman owns more than 60 companies across a range of sectors. When asked if Oman Air would be one of the companies up for privatisation, Balushi said that it would be privatised at the appropriate time.
Oman, unlike its Gulf neighbours, has fairly small hydrocarbon reserves and exports oil in low volumes. After increasing spending over the past few years, in order to improve social welfare and create new jobs to support a growing economy, the country is now struggling to manage its finances.
In June the International Monetary Fund (IMF) warned that Oman must reduce its spending and raise income from non-oil revenues in order to maintain its finances at a sustainable level.
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The sale of government companies plays a big part in generating the revenue needed to keep a healthy financial situation, whilst at the same time reducing the costs of the state. However, the Sultanate is not yet ready to give up on investing in projects to develop the economy, which it has already started.
Balushi explained that “the government is aware of the importance of sustaining a positive economic growth, which requires continued spending on developmental projects, which is why it is continuing with its policy of expansion in spending while at the same time encouraging both the local and foreign investments.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com