The Omani government’s plans to privatise two state-owned electricity companies will have only a “modest” positive impact on fiscal deficit, but signal a shift towards more open investment policies and diversification, according to a new report from Fitch Solutions.
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According to Fitch, “the decision to invite foreign investors thus underlines a broader drive by the government, accelerated since the oil price slump that began in 2014, to diversify the economy away from hydrocarbons production.”
“This strategy…rests, in turns, on attracting greater flows of foreign direct investment,” the report added.
which Fitch said is equivalent to 5 percent of non-oil revenues per year, and about 1 percent of total revenues.
Fitch estimated that the government’s fiscal deficit is 7.9 percent of GDP in 2018, compared to 6 percent in 2019.
Combined, OETC and MEDC have combined assets worth approximately $3.2 billion.
“While the exact amount earned from the sales will depend on investor appetite – which in turn will depend on factors like global ﬁnancing costs and proposed dividends – the ﬁscal revenue gains look set to prove relatively modest,” the report notes.
Lastly, Fitch noted that the Omani government has made “good progress” in attracting foreign direct investment, as shown by the $13 billion urban development project in Muscat signed with UAE-based Majid Al Futtaim.
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Oman is a country on the Arabian Peninsula. Oman’s official religion is Islam. The coast is formed by…