Job Plan Funding Linked to Procurement in Oman Budget: What It Means for Business Growth and Investment
MUSCAT, JANUARY 2 — Oman is integrating labour-market support directly into its public spending framework by linking a portion of funding for its employment programme to government and state-affiliated procurement. This initiative coincides with the launch of the Sultanate’s 2026 budget and the Eleventh Five-Year Development Plan (2026–2030).
Officials have announced an allocation of approximately RO 100 million annually for the employment programme over the plan period. This includes a contribution of 1.2 percent from the value of contracts and procurements awarded by government units, companies under the Oman Investment Authority, and oil and gas sector contracts.
This approach marks a significant shift, as employment policy moves beyond a standalone budget line to become an integral part of procurement processes. The aim is to distribute responsibility for job creation more widely and enhance employment stability as the new five-year plan commences.
The 2026 state budget projects total revenue of RO 11.447 billion, based on an average oil price assumption of $60 per barrel. Estimated expenditures stand at RO 11.977 billion, resulting in a projected deficit of around RO 530 million.
Breaking down the revenue, officials estimate net oil revenues at RO 5.752 billion, net gas revenues at RO 1.961 billion, and non-oil revenues at RO 3.734 billion.
The employment funding mechanism raises practical considerations for contractors, suppliers, and SMEs dependent on public tenders. Questions remain about the application of the 1.2 percent contribution throughout procurement cycles, its disclosure in tender documents and invoices, and safeguards to ensure it promotes job creation without distorting competition or increasing project costs.
The broader 2026 fiscal framework includes estimated current expenditures of RO 8.771 billion, with RO 3.160 billion allocated to defence and security, and RO 4.700 billion to civil ministries. Public debt service is projected at approximately RO 911 million, covering interest payments and repayment obligations.
To finance the budget, the government plans domestic borrowing of around RO 902 million, external borrowing of about RO 990 million, and a drawdown of roughly RO 400 million from reserves.
Additionally, a Royal Decree mandates the Ministry of Economy to release the Strategic Programmes Volume for the Eleventh Five-Year Plan in the first quarter of 2026. Projects will be defined at the beginning of each year and monitored through regular evaluations.
Special Analysis by Omanet | Navigate Oman’s Market
Oman’s integration of employment funding into government and state-linked procurement creates a new model of shared responsibility for job creation, potentially boosting employment stability but posing compliance and cost challenges for contractors and SMEs. Smart investors and entrepreneurs should monitor procurement frameworks closely to leverage opportunities arising from public tenders while anticipating adjustments in contract pricing and competition dynamics. This strategy also signals Oman’s commitment to sustainable economic development amid fiscal pressures, highlighting sectors aligned with government priorities as key areas for growth.
