Oman Cuts Pay 23% for New Civil Servants

(Bloomberg) --

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% to 1,035 rials ($2,689), while those with a bachelor’s degree would face a cut of 14% to 785 rials, 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 stabilize 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% 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% and lowering a cost-of-living allowance paid to government workers. Oman is yet to implement VAT.

©2020 Bloomberg L.P.

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