Abu Dhabi, UAEFriday 29 May 2020

Oman cuts salaries for new civil servants

Government seeks to reduce expenditure as low oil prices and pandemic take their toll

Mina Sultan Qaboos in downtown Muscat, the capital of Oman. Silvia Razgova / The National
Mina Sultan Qaboos in downtown Muscat, the capital of Oman. Silvia Razgova / The National

Oman has reduced the salaries of new civil service employees by up to 20 per cent with immediate effect as the government deals with the economic impact of lower oil prices and the Covid-19 pandemic.

“All new recruits in the civil service will now get one grade lower in the salary scale according to their qualifications,” the Civil Service Council said on Sunday.

The wage cuts range from 20 per cent for doctorate holders to 5 per cent for secondary school graduates.

Oman employs about 180,000 civil servants in various government ministries.

The government last month announced plans to cut its expenditure by 10 per cent, equivalent to 500 million rials (Dh4.7 billion). It said all government employees who have served for 30 years would be retired and that salaries of board members in government organisations would be halved.

“It makes a lot of sense to reduce the salary burden of the civil service at a time when the economy is being hit by declining oil prices and the coronavirus pandemic,” Said Al Kharusi, an economic analyst, said.

Oman announced 157 new cases of Covid-19 on Sunday, taking the total of infected people to 5,186, of whom 22 died and 1,465 have recovered.

Last week, the Finance Ministry cut an additional 5 per cent from planned spending as a result of falling oil prices.

Oman's oil currently sells at $35 per barrel, whereas the 2020 budget is based on a price of $58. It has estimated a deficit of 2.5 billion rials this year.

Oman also announced a decision on Sunday to liquidate its 31 per cent share in GlassPoint Solar due to “the sharp drop in oil and gas prices as a result of the global economic slowdown because of the Covid-19 pandemic”.

The US-based company uses solar power to create steam for so-called enhanced oil recovery in oilfields.

Its other major shareholder is Royal Dutch Shell.

Updated: May 17, 2020 06:00 PM

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