Thousands to be affected as Oman halts bonuses and benefits for state employees

Government says benefits such as health insurance, loans, scholarships and mobile phones are ‘not basic rights’ 

Oman’s Ministry of Finance has ordered all state-owned companies to halt dispensing the 2016 annual bonuses as well as benefits for their employees, according to a circular issued by the ministry recently.

The action was taken to cut spending and improve the efficiency and effectiveness of government bodies amid the oil price slump, the circular said.

The circular also said that all state-owned companies should rationalise spending. “It requires cooperation of all in order to preserve the integrity of the financial situation of the state,” said the circular.

There are more than 60 state-owned companies, according to the Ministry of Finance.

The ministry earlier said that bonuses and benefits were not “basic rights” of the job and were outside the framework of public expenditure. It also said benefits and bonuses were a financial burden on the government bodies’ budgets.

Benefits include health insurance for the employee and his or her family, interest-free personal and housing loans, huge cash bonuses for some employees, free scholarships, free mobile phones, free medical checks, travel health insurance, furniture allowance and Ramadan and Eid allowances. All Omanis get free health care at government hospitals, and health insurance is usually used for treatment at private hospitals.

Oman’s 2017 General Budget focuses on austerity measures and spending cuts owing to the plunge in oil prices. Government spending this year is projected to total 11.7 billion rials (Dh111.3 billion) and revenues 8.7 billion rials, which would result in a deficit of 3 billion rials.

Oman posted a budget deficit of 5.3 billion rials in 2016, as revenues declined by more than 30 per cent. The actual deficit has turned out to be much bigger than projected; it had reached 4.8 billion rials in the first 10 months of 2016, according to official data.

The country expects to earn 4.5 billion rials from crude oil, 1.6 billion rials from natural gas and the remaining from other sources, according to the figures released in the official gazette recently.

The ministries’ spending is estimated to be 4.3 billion rials in 2017, with a decline of 100 million rials, compared to 2016.

Spending on defence and security is estimated at 3.3 billion rials, with a drop of 100 million rials.

The estimated deficit will be met by international borrowing (2.1 billion rials), domestic borrowing (400 million rials) and drawings from the State General Reserve Fund (500 million rials).