Oman launches $5bn fund for major projects

Oman Investment Authority

• Worth $1 billion a year
• 90% of fund for major projects
• Green energy a focus

Oman Investment Authority plans to deploy about $1 billion per year over the next five years as part of a new fund launched on Wednesday that will primarily focus on large-scale projects in the sultanate.

The OIA officially announced the launch of the Future Fund Oman with $5.2 billion of capital, 90 percent of which will be invested in major projects located in Oman.

Small and medium-sized enterprises will receive 7 percent with the remaining 3 percent invested in startups.

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Oman officials said projects coming under the investment fund will include tourism, manufacturing, green energy, fisheries, agriculture, ports and logistics, mining and information and communication technologies. 

“This focus is intended to rejuvenate these vital sectors and contribute significantly to Oman’s broader economic objectives,” said Abdulsalam Al Murshidi, OIA president, in a statement.

It also aims to empower the private sector and attract more foreign direct investment (FDI) to Oman, he added.

FDI in Oman rose 27 percent year on year to nearly $13 billion in the third quarter of 2023.

The UK was the leading source, injecting more than $6 billion, according to data from the National Centre for Statistics and Information, followed by the US and the UAE.

The oil and gas industry continued to receive the majority of investments, accounting for 53 percent of total FDI.

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In his latest AGBI column, Matein Khalid, the chief investment officer in the private office of Abdulla Saeed Al Naboodah, said macro signs for Oman this year are far brighter after GDP growth fell to 1.3 percent in 2023.

He cited the easing of stringent financial conditions, an $83 a barrel Brent crude price that is at least $15 above Oman’s current budget breakeven price, a rebound in construction and retail, and an expansion of the oil and gas sector with a completion of major infrastructure projects and higher FDI capital inflows.

In January, Standard Chartered said Oman is on course to regain its investment-grade rating this year but analysts said challenges remain in reducing the economy’s dependence on hydrocarbons.

The 2024 budget projects oil and gas revenues at $19.5 billion, representing 68 percent of total revenues, with oil alone contributing over $15.5 billion.

Oman’s country ratings were raised to BB+ last year, one notch below investment grade.

It does not have the hydrocarbon reserves of its fellow GCC members to the north and is one of only two GCC states not to have an investment grade rating – the other is Bahrain. 

An investment grade rating means lower borrowing costs and puts the country on the radar of mainstream international investors