Oman Plans to Halve Oil’s Role in Economy

Oman Plans to Halve Oil’s Role in EconomyOman Plans to Halve Oil’s Role in Economy

Oman's government has released a five-year plan to halve the economy's dependence on the oil industry, as low crude prices pressure government finances.

The 2016-20 plan, set out in a statement by the Supreme Council for Planning late on Saturday, said over 500 programs and policies would seek to diversify the Omani economy into sectors such as manufacturing, mining, transport and tourism, Reuters reported.

The plan aims to cut the oil industry's contribution to gross domestic product to 22% from 44%; the contribution of natural gas would drop to 2.4% from 3.6%.

Average annual investments would total around 28% of gross domestic product; cumulative investment over the five years is expected to be $106 billion, against $99 billion envisaged in the previous five-year plan.

The new plan is to make heavy use of public-private partnerships, with 52% of total investment to come from the private sector against 42% in the last plan.

The plan assumes an average oil price of $45 a barrel for 2016, $55 for 2017 and 2018, and $60 for 2019 and 2020, while Oman's average oil production is assumed to remain flat at 990,000 barrels per day. Brent crude oil is currently just above $37.

The figures assume that Oman will continue running a state budget deficit throughout the plan.

Last week, the government announced plans to cut its deficit to $8 billion this year from an actual $11 billion last year, partly through big spending cuts.