Oman to receive financial aid from Qatar.
Image Credit: Sultan Al Hasani/ Reuters.
Oman, which is considered one of the poorest country in the Gulf has been given $1 billion in financial aid, as the country tries to mitigate its economic crisis, which has been worsened by low oil prices and the coronavirus pandemic.
Qatar has already sent $1 billion to Oman’s central bank. Both countries enjoy good diplomatic relations, and have improved when Saudi Arabia and United Arab Emirates imposed an embargo on Qatar in 2017. Oman is one of the few countries which can allow Qatar to circumvent the air, sea and land blockade, providing Qatar with a much needed alternative trade route.
United Arab Emirates is also considering to aid Oman, but it is believed that it might come with some conditions which will affect Oman’s neutrality. Oman enjoys good ties with Iran, and also act as a mediator between Saudi Arabia and Houthi-led government of Yemen.
Oman is trying to raise more money, as $1 billion is not enough. According to an investor that wants to remain anonymous since he cannot discuss transactions,
A billion isn’t going to move the needle – they need to raise a lot more.
Oman has introduced cost-cutting and revenue- raising measures. This will include a 5% sales tax as from nest year, and the country is preparing to tax higher, high income earners.
According to International Monetary Fund (IMF), Oman’s GDP is expected to contract by 10% this year. Oman requires oil prices to reach $105 a barrel, to be able to balance their budget. Currently, oil is $40 a barrel, which puts Oman at a fiscal deficit of 18% of GDP this year.