Omanis seeking work protest again, pressure cash-strapped government

Sultan Haitham bin Tariq al-Said delivers a speech after taking the oath before the Royal Family Council in Muscat, Oman, January 11, 2020. REUTERS / Sultan Al Hasani

Groups of Omani protesters demanding jobs gathered in several cities on Tuesday for the third day in a row, activists said, in the biggest challenge yet for the new ruler of the Gulf state.

Social media posts showed a group of protesters holding a sit-in under a bridge in the northern city of Sohar. Other protests were reported in several other towns, including Rustaq, Nizwa and Sur.

Videos and photos showed security forces serving protesters with water, a change in approach from Monday’s protests when police fired tear gas to disperse rallies and arrested groups of protesters. Read more

Sultan Haitham, who ascended to the throne last year after the death of Sultan Qaboos, has had to take austerity measures to ease the strain on public finances at a time of low oil prices.

The government did not comment on Tuesday’s protests. Oman State TV showed the Sultan chairing a meeting on youth employment.

Young people are the wealth of the nation, its unfailing resource … We will make sure to listen to them, to feel their needs, their interests and their aspirations,” said Sultan Haitham.

The economy of Oman, a relatively small energy producer with high debt levels, is vulnerable to fluctuations in oil prices and external shocks such as the coronavirus pandemic.

The protests follow last month’s introduction of a value added tax (VAT) for the first time, one in a series of reforms aimed at ensuring the sultanate’s financial sustainability.

Oman has advanced its program to replace foreign workers with Omani citizens to ease pressure on the labor market, but youth unemployment is relatively high at over 10%.

“The authorities may choose to postpone the implementation of some of the planned fiscal measures to maintain socio-economic stability, especially if oil prices rise enough to ease the pressure on the budget,” said Zahabia Gupta, analyst at S&P Global Ratings.

The International Monetary Fund has estimated that Oman’s gross external debt will rise to around 112% of gross domestic product this year, from 127% of GDP last year.

Rachna Uppal, director of research at Azure Strategy, said Oman is committed to diversifying its revenue stream away from hydrocarbons, but headwinds are looming on the horizon.

“Slow reform and increased austerity measures combined with lingering uncertainty over the pandemic are testing popular patience … if protests continue or spread, it could scare investors off at a critical time for Oman, ”she said.

So far, markets appeared to have ignored the protests, with Oman’s credit default swaps – a measure of sovereign default risk – unchanged on Tuesday, according to IHS Markit data.

“Seeing where the oil prices are and Oman’s decision at the start of the year to finance the deficit – it has already raised $ 4.35 billion out of its $ 5 billion in external financing needs – it doesn’t There are no major concerns in the market, ”said Zeina Rizk, fixed income fund manager at Dubai-based Arqaam Capital.

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