The Sultanate of Oman will establish a new economic city in South Batinah, including two free zones operated by Oman Logistics.
Oman is seeking to boost its economy and attract foreign investment after exceptional oil revenues and fiscal consolidation measures improved its fiscal and external position.
Last June, the Oman Future Fund was launched, an investment fund with a capital of OMR 2 billion ($5.2 billion), with the aim of boosting economic activity and activating the role of the private sector within the framework of the Sultanate’s Vision 2040.
It also launched a three-year financial stabilization program in October to add momentum to the sultanate’s economic recovery from the pandemic-induced slowdown and support the development of its financial sector.
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The Oman News Agency said that Sultan Haitham issued two royal decrees to establish an economic city called “Khazaen Economic City” in South Batinah Governorate, while the second decree stipulated the establishment of two free zones within this city.
According to the official agency, Oman Logistics Company will be the operator of Khazaen Economic City and its two free zones, and Khazaen Economic City Company will be the developer of the Economic City and its two free zones.
The Sultanate is counting on its many economic zones, with investments in economic zones growing by 6 percent to $39.5 billion in 2022, Ali al-Sunaidy, head of Oman’s Public Authority for Special Economic Zones and Free Zones, revealed in May.
Al-Sunaidy explained that investments in the 13 areas supervised by the authority have grown remarkably and that there are 8 different new areas under construction or under study, and the integrated economic zone in Al Dhahirah governorate – under planning and construction – will be one of the promising areas.
The Ministry of Finance in Oman and the Saudi Fund for Development signed a memorandum of understanding to finance the infrastructure construction project for the zone, the first phase of which is estimated to cost about OMR 122 million.
The sultanate achieved a primary budget surplus after several years of deficit, which constituted 7.5 percent of GDP in 2022.
It is expected to continue to run a surplus in the medium term thanks to oil revenues and fiscal measures, according to IMF staff.
But Oman’s finance ministry said in January this year it expected a budget deficit of 1.3 billion riyals this year, or 3 percent of its economy, after running a surplus of 1.14 billion riyals for 2022.
Oman’s non-oil economy is expected to grow from 1.2 percent in 2022 to 2 percent in 2023 and 2.5 percent in 2024.
The Sultanate has signed agreements with its neighbors in the Gulf Cooperation Council (GCC) to boost its economy and create jobs, including a $3 billion rail network linking Oman to the UAE, and a $320 million infrastructure development project with the Saudi Fund for Development.
In April, Fitch Ratings revised its outlook for Oman from stable to positive and affirmed its rating at BB as the country’s finances were strengthened on the back of rising oil revenues and low public debt.
The rating agency said at the time that the positive outlook reflected the view that the government was committed to fiscal consolidation.
Oman is also the largest exporter of liquefied natural gas in the Middle East after Qatar, according to Bloomberg data.
At the end of December, it established the Integrated Gas Company, which now manages all government assets and activities in the gas sector, and is expanding its natural gas export taking advantage of the increase in global demand for it.
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