Oman’s Vision 2040 calls for swift economic transformation and a holistic transition to a new phase of development. A phase that enables the country to continue to successfully adapt to a constantly changing world and build on the great achievements of the past five decades. However, for this transition to be successful at this crucial time for the country, it must be implemented in a holistic and all-encompassing approach in order to upgrade all aspects of the existing system, including but not limited to, the private sector, public sector, governance, policies, economy, education, labour force, civil society, social contract, etc.

There are many reasons that make reforms necessary and urgent for Oman today more than ever. The country is at crossroads. It’s most important revenue resource, hydrocarbons, is increasingly losing importance globally as the oil market continues to head closer to peak-demand and shift to renewable energy increases. This makes the country in dire need for diversifying its economy away from oil. Moreover, the large youth population, aspiring for increased participation in decision-making, present a double-edge sword if not managed properly and timely. There is also a mismatch between the skills taught and the skills demanded in the labour market, negatively impact employment and the country’s productivity. This article will explore some of the aspects that must be upgraded as part of the holistic approach needed.

The 2014 crash in oil prices underlined the country’s high dependency on hydrocarbons and the need for fiscal reforms to ensure economic resilience. In addition, the recent oil production increases after OPEC and Russia failed to reach an agreement and massive drop in global oil prices further highlight the urgency for fiscal reform. This reform should include: out-of-the-box fiscal and monetary policies to enable the economy to smoothly sail through external and internal shocks and maintain macroeconomic stability; a  change in the budgetary process to enhance government accountability and discipline in the revenue-expenditure process; retargeting of subsidies to low income individuals instead of products; increasing capital expenditures to create new resources for the country and jobs for Omanis; and abolishing public debt. Meanwhile, absence of fiscal consolidation will lead to unsustainable growth in public debt and financing the deficit will be even more challenging, especially as oil revenues continue to drop, placing the country’s future in unchartered territory.