Oman puts most foreign public sector consultants out of a job

The government of Oman is stopping the large majority of its contracts with foreign consulting firms and independents, as the country scrambles to free up funds for its Covid-19 response. 

With a population of 4.7 million, Oman is one of the larger countries in the GCC. However, more than a third of the sultanate’s residents are expats, the most of which live and work in Muscat and the Batinah coastal plain northwest of the capital. 

New government policy is expected to see a surge in expats forced to leave Oman, as many are set to see their jobs slashed amid austerity spending cuts due to the Covid-19 induced downturn. According to the World Bank, Oman’s economy will “significantly contract” this year due to the oil price slide and a fallout of economic activity.

Meanwhile, fiscal deficits will remain under strain due to low oil and gas prices and is expected to markedly widen to over 17% of GDP in 2020, and with public spending on healthcare spiralling to curb the pandemic, public debt is estimated to exceed 70% of GDP at the end of this year. 

In a bid to save costs, Oman’s government said it will not renew at least 70% of foreign experts and consultants working in all civil and government units, without exception. In addition, at least 70% of government consultants and experts who have served the government for 25 years or more will be brought into mandatory retirement. 

On top of the direct headcount savings, government ministries and institutions have been called on to where possible replace foreign workers with locals, in a move known as an ‘Omanization policy’ aimed at providing better opportunities for the state’s local citizens. 

According to analysis by Consultancy.org, Oman has a fragmented consulting market. The top end of the market – served by large consulting firms – is valued at over $100 million, but the size of the market below the this segment is considerably larger, with many smaller foreign and domestic consultancies serving specialist needs. Also, a large share of foreign consultants works as an independent, meaning that a considerable base of fees flows to parties beyond the traditional firms. 

The announcement is the latest in a series of measures to cut public spending. Last month, Oman’s officials announced a 5% cut to the budgets of the armed forces, and cut other government spending in areas of infrastructure, tourism and real estate, among others.