Following the death of Sultan Qaboos bin Said Al Said in January 2020, Haitham bin Tarik Al Said, an Oxford-educated cousin of the late sultan, was named Oman’s new leader. The new sultan had held various government positions over the previous 30 years, including minister of culture and heritage, secretary-general of foreign affairs and head of the Anglo-Omani society. He also led the committee overseeing Oman Vision 2040, the country’s economic and social development strategy.
The peaceful transition of power in Oman took place amid regional tension, low oil demand and the Covid-19 pandemic. The pandemic’s unexpected disruption provided the new sultan with an opportunity to implement reforms. In addition to fiscal and economic reforms, Sultan Haitham acted to promote power devolution, government accountability and transparency.
New Laws
A decree issued by Sultan Haitham in January 2021 introduced a new Basic Law – the equivalent of the country’s constitution – that established a stable mechanism for the transfer of power in the sultanate, as well as for the appointment of the crown prince and the clarification of his duties, improving transparency in the decision-making process. In addition, the legislation reaffirmed the rule of law and the independence of the judiciary as a basis for governance in Oman. The new law emphasised the government’s role in guaranteeing citizens’ rights and freedoms, including gender equality, and reinforced institutional oversight by establishing a committee to monitor the performance of ministers and other officials. The law also set up a financial and administrative control system to improve governance.
Another decree introduced new rules for the bicameral Council of Oman, specifying its powers and conditions of membership, as well as members’ rights and duties. The council’s role is to approve or amend laws referred to it by the government, propose drafts of new laws, and discuss development plans and the budget.
Fiscal & Economic Reforms
Since assuming power, Sultan Haitham has reformed government and public sector entities, as well as moved to enact fiscal reforms, appointing new finance and foreign affairs ministers and a central bank chairman to push forwards the new agenda. The sultan has renewed efforts to balance Oman’s finances and prepare it for a post-oil economy, including by cutting subsidies and introducing a value-added tax, amid reports that the government could even be planning the country’s first income tax.
Oman’s public administration entities have adjusted to a medium-term fiscal balance plan. In May 2020 the government revisited the public wage bill before implementing mandatory retirement limits for public sector workers, as well as called for the non-renewal of 70% of expatriate contracts for government consultants and experts once they expire. The sultan had issued 28 royal decrees by August 2020, disbanding five government councils and merging over 10 ministries in the process to reduce expenditure and streamline bureaucracy.
In June 2020 the new Oman Investment Authority was created by merging two existing investment funds. Moreover, the Ministry of Economy – abolished in 2011 – was re-established by royal decree in August 2020, replacing the Supreme Council for Planning.
In May 2021 Sultan Haitham directed the government and private sector to create more than 32,000 jobs to support self-employed Omanis and entrepreneurs. The initiative was part of efforts to increase employment and mitigate the effects of the pandemic. The plan was supported by stipends to create 15,000 private-sector jobs over the next two years and government subsidies for those entering the workforce for the first time.
Oman’s cost-saving measures and reforms, along with higher oil prices, have helped the sultanate stabilise its public finances, leading some rating agencies to raise their outlook for the country. Oman’s new agenda and laws, as well as improved efficiencies in public sector entities through consolidation and enhanced oversight, should improve the country’s business environment and support increased foreign direct investment over time.
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