In 2016, all the six members of the GCC had agreed to introduce  a 5 percent VAT. The UAE introduced the VAT in 2018 followed by Bahrain in 2019. 

Ali bin Masoud Al Sunaidy told Bloomberg at the the World Economic Forum in Davos, “VAT is something people don’t like it but this is something we have been lobbying for. It will come into effect sometime in the beginning of next year.”

According to a EY study, GCC countries that have adopted VAT are expected to generate additional annual revenues of $25 billion. This is helpful, especially when countries are aiming to generate more revenues. For example, Muscat is targeting an economic growth between 2.5 percent and 3 percent this year, the media reports said. 

Previously, the Sultanate’s GDP took a sharp dip from 30 billion Omani riyals to 26 billion riyals. However, its economy has since rebounded to 30 billion riyals, according to Al Sunaidy. 

The Sultanate is introducing a set of reforms this year to diversify its non-oil economy. Earlier this month, it also introduced a new foreign domestic investment (FDI) law. 

The Sultanate’s decline in oil revenue is affecting its sovereign debt which is expected to increase more than 60 percent this year, observed Fitch Ratings.

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The money received is expected to aid Oman’s economy.

The funding was coordinated by Citigroup Global Markets and First Abu Dhabi Bank along with JP Morgan securities, MUFG securities EMEA as well as Natixis, Societe Generale, and Standard Chartered Bank.

Oman offered five-year bonds that are due in February 2025, at a final yield of 4.95 percent. The 10-year bonds, on the other hand, were priced at a yield of 6 percent. Both five year and 10-year Oman bonds received orders worth $14 billion from the investors.

The yield was below the initial price guidance of 5.375 percent and 6.375 percent for the five-year bonds and ten-year bonds respectively.

According to data from various sources, Oman issued $750 million in five and half year bonds and $2.25 billion in ten-year bonds.

The reports vary slightly from the previous estimations. The earlier estimated size of the bond was $2 billion, which was supposed to cover up Oman’s budget deficit that was expected to be $7.3 billion in 2019.

The fall in oil prices had hit Oman like most other countries whose main source of income was oil production. The decreased revenue led to a widening of the nation’s fiscal deficit.

In early 2019, the three major rating agencies S&P Global, March Moody and Fitch Ratings downgraded Oman’s economic capacity and potential. The bond was an experiment to see if Oman could tap any foreign debt markets.

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