All state-run companies will reduce their operational and administrative expenses in 2020 by 10%, the Finance Ministry said
Oman is extending austerity measures by telling government-owned companies to cut expenditure after the plunge in oil prices.
All state-run companies will reduce their operational and administrative expenses in 2020 by 10%, the Finance Ministry said in a statement. It also asked government-owned firms to stop the implementation of any new projects or capital spending for this year.
Oman, the Gulf country most exposed to the fallout from the oil-price war, already announced plans to reduce budget spending by 5% as the health emergency and much lower crude prices hammer revenue.
Facing its seventh straight year in the red, Oman’s fiscal deficit is expected to average almost 8% of gross domestic product over 2021-2023, according to S&P Global Ratings.
“The sharp drop in oil prices in 2020 will intensify Oman’s fiscal and external pressures, leading to a faster deterioration in the government’s balance sheet, which has considerably weaker buffers than during the 2014-2015 oil price shock,” S&P said last week when it downgraded the government’s long-term credit rating one step to BB-.
“Large upcoming external debt maturities in 2021-2022, along with high fiscal deficits, could raise funding pressures and borrowing costs,” it said.