Oman cuts pay for new civil servants by up to 23%

Oman has resorted to spending cuts to stabilise public finances

Oman made a rare decision to cut the salaries of new government employees, its latest austerity measure in response to the coronavirus pandemic and low oil prices.

The biggest Arab oil exporter outside OPEC assigned new salary grades for hires, as determined by qualifications. A PhD holder’s entry level salary would be reduced 23 per cent to OMR1,035 ($2,689), while those with a bachelor’s degree would face a cut of 14 per cent to OMR785, the Civil Service Council said on Sunday. Oman last raised civil servants’ salaries in 2013.

Oman, among the Gulf’s most vulnerable economies, has resorted to spending cuts to stabilise public finances while borrowing costs remain too high to raise capital in the debt market. Similarly to other regional governments, Oman also reacted to the economic crisis with plans to inject liquidity into its banking system.

The sultanate plans to cut spending in all civil, military and security ministries and units for 2020 by 10 per cent to mitigate the effects of low oil prices and narrow its budget deficit.

Austerity measures in neighboring Saudi Arabia included tripling value-added tax to 15 per cent and lowering a cost-of-living allowance paid to government workers. Oman is yet to implement VAT.

Read: Saudi Arabia triples VAT, cuts cost of living allowances