Thousands to be affected as Oman cuts benefits for state employees

Thousands of expatriate and national employees working at Oman’s state-owned institutions, run with 50 per cent government funding or more, are to have a number of benefits slashed, according to a decision from the Ministry of Finance.

According to Times of Oman, the circular (5/2016) signed by Darwish bin Ismail bin Ali Al Balushi, Minister Responsible for Financial Affairs, stated that the decision has been made to cushion the economy which is struggling due to the oil price crunch.

A number of allowances to be cut

According to the decision, privileges such as health insurance for employees and family, life insurance allowance, car insurance allowance for staff and family members, loans, bonuses, incentives during Ramadan or Eid and increments not related to employee’s Key Performance Indicators (KPI) will be stopped.

Additionally, allowances for school fees, mobile phones and bills, annual medical check-up for employee and family, provision of private car to senior managers, annual leave tickets, housemaid allowances, house rents, furniture allowances, credit cards for CEOs, hospitalisation fee and other allowances will also be stopped temporarily.

The decision covers well over a dozen agencies including authorities for the electricity and telecommunications industries, the Public Authority for Civil Aviation and the Capital Market Authority.

Cost-cutting measures to meet budget deficit

Oman is imposing a string of austerity measures after it posted a budget deficit of about 4.5 billion Rials ($11.7 billion) last year.

The decision mainly aims to halt privileges, which do not come within basic rights associated with the job, which are usually out of framework of normal expenditure, like allowances for entertainment and others which hit the budgets of the institutions.

Recently, the International Monetary Fund (IMF) has already cautioned Oman to make urgent steps to secure the future of its fiscal budget.

It had urged the government to embark on the long-term economic sustainability plans. The IMF had also urged Oman to cut its wages bills on the public sector.

This year, Oman has already cut gasoline and diesel price subsidies, and reductions for electricity and liquid petroleum gas are on the drawing board.

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