As Oman continues its austerity measures in the wake of record-low oil prices, residents are finding the cost of living higher than before – with many struggling to make ends meet. Team Y reports.
On January 1, the residents of Oman were greeted with some very sobering news: the price of petrol was increasing to its highest level since the Government cut its generous fuel subsidies exactly one year ago in a bid to help offset the tumbling oil price.
Since then, the country has seen a range of austerity measures put in place; from government employees having their benefits cut, to salary reductions, higher visa costs and corporate tax increases; to name but a few. But it’s not only the Government looking to save money. School fees are on the rise for expats while unexpected rent hikes can mean the difference between having enough cash to survive on until the end of the month. In October last year, the International Monetary Fund warned that Oman would have to continue its austerity measures – and this was reflected in the 2017 State Budget, in which the Government expects to spend RO11.7 billion despite revenue of RO8.7bn, leaving a deficit of RO3bn.
Meanwhile, residents also face the possibility of a new VAT and excise tax being levied by the middle of this year, after finance ministers from all GCC countries agreed to the system last year in June.
At the time, Jeanine Daou, Middle East indirect taxes partner at PricewaterhouseCoopers, said: “The introduction of VAT and Excise Tax constitute an important policy reform aiming to help GCC governments achieve medium to long-term social and economic policy goals, and to reduce reliance on hydrocarbon revenues.
“Some administrative matters still need to be resolved, notably with regards to the tax collection mechanism related to intra-GCC trade.”
If you thought 2016 was a tough year for your personal finances then be prepared for even more belt tightening this year.
Here, we sit down with people from all walks of life to hear how they are managing financially, and how the cost of living is prompting them to make tough decisions about their futures in the Sultanate.
Merlin William, an expatriate teacher in Oman, is having to make daily sacrifices to make ends meet for herself and her family
People with fixed monthly incomes will be affected as expenses rise. We both (Merlin and her husband) have jobs here, and even then we can’t meet our monthly outgoings. In our case, we have expenses such as house rent (which went up by 8 per cent), school fees (which went up by RO50 for a year), and two car loans.
Because of this we can’t save money like we did in previous years. Until last year, we were living in Al Khuwair but a few months ago we moved to Al Hail, where we could find a cheaper flat.
My husband has started to go to his office by carpooling with his colleagues. As a matter of fact, we plan to get rid of our SUV. This should save us from the loan as well as the fuel expenses, which are exorbitantly high. We are also planning to send our kids abroad for their studies – maybe a boarding school – as it would be cheaper than here.
We have also seen that there has been an increase in the prices of commodities, including groceries in Oman. The hike may not seem substantial but it has affected our family quite a lot. Nowadays, we head out to buy groceries and other essential goods on weekends, as some supermarkets tend to offer promotions on their goods. We have even started checking which outlet provides the most discounts, and head there.
Despite all of this, we are still RO200 short of what we used to save before.
Bangladeshi expat Ashraf Ahmed, a cleaning service worker, can’t afford to stay with his family in Oman due to a rent rise
I am sending them (my family) back to our country. My salary of RO620 isn’t enough to make things work in the ongoing conditions. Things were all running smoothly until mid-2016.
But in August of last year, my landlord hiked our house rent (for a three-bedroom house) from RO245 to RO300. This was the first time that there was such an increase in the eight years that we had been staying in Oman.
This has meant that our savings are almost non-existent. Apart from that, I am also spending roughly RO10 as a part
of my monthly fuel expenses. And what’s funny is that my salary remains the same. I have not received a salary rise
My wallet is literally empty by the 18th or 19th of the month, meaning I have to live on peanuts for the next 10 days.
The only solution seems to be to send my wife and kids back to Bangladesh. It pains me to even think of that situation but it’s happening soon. I have asked my company for a rise. If that doesn’t work out, then my family will be off. If things get too bad, I will be leaving too.
Ameer Mohammed Naaser, a 65-year-old Omani property developer, has had to cut staff in the wake of the oil crisis
When the oil price fall first broke, I didn’t pay much heed. I believed that the oil market would recover in a few weeks’ time. However, as you now know, that didn’t happen. Soon, I found my business looking down the barrel of a gun.
The thing with owning a business is that you are not just looking after the interests of yourself and your family’s but also those of others. If I were to slash the salary of one of my employees then I would be responsible for that.
From January to March 2016, all was going well. But I soon realised that I was incurring losses, as opposed to making money. I cannot say that we weren’t able to sustain ourselves but I know that our margin fell by 30 per cent. The cost of raw materials such as cement, sand, reinforcing steel and wood increased substantially. Even then, it was the cost of transportation that really hurt us.
When the Government took steps to stabilise their losses, they took off the subsidy on various commodities, petrol being one of them. This meant that the cost of transporting our workers from work to home was shooting up, and the cost of hiring trucks to transport raw materials was touching unbelievable levels.
So, before I lost total control of the situation, I took things into my own hands. I had to let go around 12 of my expatriate staff. However, I have promised them that I shall bring them back as soon as things stabilise here.
Things are looking much better than they did last year but I think it will be another year before we can start reaping the benefits of the austerity measures we took.
Apart from that, on a personal level, I have made a lot of sacrifices too. My family and I have stopped using our SUVs to travel around the city. We take our sedan if we are travelling along, and resort to the SUV only when we travel together. With petrol prices touching 186 baisas (MOGAS 95), we are struggling. I still remember the good old days when petrol cost a mere 120 baisas.
Koshy Varghese, an Indian expatriate, has had to send his family home after his outgoings nearly put his back to the wall
The cost of living in Oman has been on the rise since last year, when the Government decided to lift the subsidies on oil, and I firmly believe that it will only get worse this year.
My family was here with me until the middle of 2016 but I had to send them back to India as our expenses shot up beyond my reach. I was the breadwinner and I had to take care of the education of both of my children as well. That’s when our family budget started to wobble and I realised that we wouldn’t be able to survive in Oman if we were all to live together.
Since they left, I have shifted to a single bedroom to save a little more every month. But the current situation is getting much worse, as the oil price is poised to increase even more in the coming months. I may have to think of some alternative methods to earn more money to survive.
Omani engineering graduate Mohammed Ali Hussain, 26, is unemployed and finds his career prospects bleak
I am not a just resident of Oman; I am a citizen of Oman. And it hurts me that I have to be unemployed and looking for a job. It seems like there is no job available for me, even after completing my course.
I initially tried to apply for a job in aviation but from the look of it, there are very few openings there. I cannot blame them because once the oil prices dipped, they had their hands tied too. Unfortunately, my engineering degree isn’t valued much anywhere since I have very little work experience.
Right now, I am doing odd jobs by helping family members set up their new homes so I can earn some money. There are days when I realise I might have to give up the idea of being an employed individual with a stable income. Right now, my only option is take a loan from the bank to start a business. But I know it would be the biggest mistake of my life.
I have thought of becoming a sales representative but that would be killing my dreams of becoming an engineer. I don’t know what to do. I tend to keep my struggles away from my family. But without their support I wouldn’t even be able to take care of my needs. I know that my dad’s business is struggling to keep a footing now. Therefore, I don’t want to take any money from him. The way forward seems very bleak.
Pradeep Kumar, 30, is struggling to save money, which he needs to support his family back home in India
Things are getting very bad for me. I can’t save any money right now. I have to pay off my car loan, as well as my monthly house rent. Apart from that, I have to send money back to my family in India.
After providing for my family, all I have is 30 per cent of my salary. And I have to use this money to pay my other expenses. As a result of this, I have had to cut down on my expenses. I am now looking to share my room with someone else to save money.
Jeffery Rhodes, an expat from Denmark, was forced to move from Oman to Saudi Arabia to continue his career in the oil industry
I began my career in the GCC region from Muscat. Things were going great as I was working for a contracting company in the oil industry. I had also been working there for a total of four years, and had taken over quite a senior role in the department because I was looking after some fresh faces.
Sadly, in March 2016, my salary was lowered by 12 per cent and by June, I wasn’t receiving any pay at all. I was living in a shared villa at Al Hail, which I knew I couldn’t afford to stay in. But, I couldn’t question my company either because I knew that they were under a lot of stress to keep going. We hadn’t undertaken any worthwhile projects for a few months. I remember companies that we were working for were shelving their plans to cut costs, thus leading to a dearth in projects for us.
I decided to stick with the company for another month. And by September, I realised that the company was about to fold so I filed my resignation, which was switched over as a termination to avoid complications. I was denied a No Objection certificate too, which wasn’t a problem for me at all.
By October, I had packed up everything and headed back to Denmark. Since then, I have been working for an oil company in Saudi Arabia. Things have been quite tough here but it is marginally better here because I am being provided with a house and other facilities. But in retrospect, things are still the same. I can see the GCC countries breathing hard to keep themselves afloat.
Amira Ahmed has had to cut down on some of her personal interests to keep from burning a hole in her pocket
This drop in oil prices has had a prominent impact on my cost of living. I had to personally to cut down my expenses up to an extent that I would buy clothes and shoes only when in a sale, and only when necessary.
I have also stopped using my car unnecessarily.
But as I am still a student and my father pays for the fees and expenses, I consider myself fortunate in that respect.
1. Shop smarter
2. Keep the change
3. Pay yourself first
4. Save with purpose
5. Make it automatic
6. Stop using credit cards
7. Create a budget
8. Stay committed